KPMG

Compensation Watch ’10: KPMG Puts Some Ballpark Figures Out There

Since it’s Monday in late July (and many people probably had one old fashioned too many last night) we figured this day would have gotten off to a slow start. Well, we’re in luck! KPMG comes roaring out of the gate today with a little compensation update from none othercall me Rudy” Veihmeyer and Henry Keizer.

The news? Well, the promotions bonuses have caused some belly aching so the boys thought they would give you a sneak peak at what you can expect come merit increase time:

Update on Our Plans for 2010 Compensation
A Message from John Veihmeyer and Henry Keizer
8:19 AM ET, July 26, 2010

In April, we told you that there would be compensation increases for the great majority of our people and, assuming KPMG meets its FY10 plan, higher bonuses than last year for EP performers, and bonuses for higher performing SP employees as well. Now, as we head into the fourth quarter, we would like to provide you with an update on this matter. As you view this information, please keep in mind that compensation increases are determined on an individual basis, and reflect each employee’s role, skills, performance, geography, and experience, among other factors.

· Merit and Promotion Increases – For employees who are not being promoted, we expect SP performers will receive merit increases that will range from the low to the mid-single digits; EP performers will receive increases up to the high-single digits and in rare cases double digits.

In addition to any merit increases, employees who have been promoted should expect to receive a promotion increase of approximately 5 percent, with one exception: newly promoted CSD Managers should expect to receive a promotion increase of approximately 10 percent.

· Variable Compensation – The FY10 pool for variable compensation will be more than double what it was last year. This means that EP-rated employees will generally receive bonuses that are significantly higher than those of last year. In addition, approximately the top half of our SP performers will also receive variable compensation awards.

Please keep in mind this information is preliminary. Final compensation decisions will be made based upon our full-year results, so the ranges above could be adjusted based upon our firm’s performance between now and September 30. But, consistent with our commitment to keeping the lines of communication open, we wanted to share with you our best current forecast about these important matters.

In line with our compensation philosophy and our focus on a high-performance culture, we remain committed to sharing the rewards of the firm’s financial performance with our employees and providing a competitive total compensation package that differentiates exceptional performers with superior rewards. As we have said before, the strong foundation we have built within the firm, as well as our near- and longer-term business prospects, make us very optimistic. But to finish this year strong and begin FY11 on a positive track, it is critical that we continue to drive a high-performance culture by doing our best work, providing the highest-quality service to our clients, growing our business, and operating efficiently.

Thanks again for your continued hard work and for all you do to help our firm succeed!

So now that you have that to chew on for your last Monday in July, feel free to discuss the “low to the mid-single digits” for the strong and “high-single digits and in rare cases double digits” for the exceptional. And if you’ve got thoughts on the variable comp pool, you can go there too, if you like. Keep us updated.

KPMG Is Overachieving in the Green Department

Klynveldians may remember back in 2008 that the firm embarked on a divine green mission to reduce waste, its carbon footprint, so on and so forth.

Well, the firm announced today that not only has it achieved its goals in two years instead of three but it also exceeded the percent reduction goal of 25% with a 26% reduction in its carbon footprint.

Formation of Living Green Teams to harness the passion of KPMG’s employees and partners in local offices nationwide. – See a Living Green Team member at right.

Recycling of every laptop, monitor and printer, for both reuse and disposal of toxic materials – This is good considering all the layoffs that KPMG did from 2007-2009, there was probably a lot of laptops sitting around just collecting dust.

In all quasi-seriousness, it’s good to see the firm taking steps to put the green back in green eyeshade. Now if we could get everyone to bike or walk to work, we’d really have something. Discuss your impressions with KPMG’s treehuggery below.

NEW YORK, Jul. 21 /CSRwire/ – KPMG LLP, the U.S. audit, tax and advisory firm, today announced it achieved a 26 percent reduction in its carbon footprint from 2007 through 2009, exceeding the firm’s stated three-year commitment of a 25 percent reduction in just two years.

In 2008, KPMG embarked on an ambitious environmental program in the United States called “Living Green” to support the firm’s commitment to reduce the amount of waste it generates, the volume of natural resources it consumes, and to reduce its carbon footprint. When it was announced, KPMG’s Living Green program targeted a 25 percent reduction in the U.S. firm’s overall carbon footprint by 2010.

The firm’s 26 percent reduction from 2007 through 2009 is based on the results of a recent analysis by KPMG’s Climate Change and Sustainability Services group that shows KPMG reduced its carbon footprint by 20 percent between 2008 and 2009, and 7 percent between 2007 and 2008.

“Living Green at KPMG has helped us better understand the need to adapt to climate change and invest in sustainable, eco-friendly business initiatives,” says Steve Clemente, KPMG principal and leader of the Living Green program. “Thanks to the commitment of our firm and the support of our 20,000 plus people nationwide, we are helping change the environment in which we live and work for the better.”

During the course of its Living Green program, the U.S. firm has reduced its electricity consumption by 9 percent and reduced paper consumption by 33 percent, while having increased the percentage of recycled paper used by 85 percent.

“KPMG’s successful carbon reductions represent the kind of corporate leadership we need at this time of environmental and economic crisis,” says Matt Petersen, president and CEO of Global Green USA, a national environmental non-profit organization dedicated to implementing solutions to global climate change. “KPMG is establishing – and beating ahead of time – reduction goals that save money and resources while reducing the carbon pollution that causes global warming.”

In achieving these results, KPMG is identifying leading practices and establishing new programs and processes at both the local office and national levels. They include:

• Formation of Living Green Teams to harness the passion of KPMG’s employees and partners in local offices nationwide. These teams implement the Living Green program at a grassroots level, driving innovation and making a difference through initiatives such as local specialized recycling programs, engagement with city-wide environmental programs, and hosting volunteer events with organizations dedicated to sustainability during KPMG’s annual Living Green week which is held each year in conjunction with Earth Day.

• Completion of a KPMG data technology center that uses multiple sources of electrical power, but features gas micro-turbines as its centerpiece. The natural gas-powered units provide exceptional energy efficiency, helping generate more than 70 percent of the power needed to run the facility and produce ultra-low carbon dioxide and particulate emissions.

• Recycling of every laptop, monitor and printer, for both reuse and disposal of toxic materials, while implementing server virtualization, which involves using one computer server to do the work of many. Server virtualization has prevented the emission of over 1,000 tons of carbon dioxide.

• In 2009, KPMG’s new Nashville office became the first firm office to be Leadership in Energy and Environmental Design (LEED) certified by the U.S. Green Building Council (USGBC), followed by offices in San Diego and Orange County, California. Recently, firm offices in Boston and Charlotte received gold-level LEED certification.

“Being a responsible corporate citizen is a key driver of KPMG’s business, affecting our relationships with clients, shaping the experiences of our people, and inspiring us to be a positive force in our communities,” says Kathy Hannan, KPMG national managing partner, diversity and corporate social responsibility.

Exodus Watch: Some Are Concerned About the Direction of KPMG’s Headcount

Granted, this does not take into effect the 23 soon-to-be KPMG Kampers jumping over from Grant Thornton but at least one Klynveldian was concerned enough to send us this:

Our source told us, “Linkedin.com gives these updates to those listed as KPMG employees.” Thinking this over, this may be trailing the movement we’ve seen over the last couple of months (since no one updates their LinkedIn accounts). Or this could just be the latest round of ship jumpers. With comp adjustments coming up relatively soon, you’d think people would sit tight for just a smidge longer to see how things shake out. OR maybe these LinkedIn numbers are just a bunch of malarkey and our source is going ape for no reason. We’re not really at liberty to say.

Discuss the latest bodycount in your office.

KPMG Acquires Grant Thornton’s Supply Chain Advisory Services Practice

KPMG’s Advisory practice will take over Grant Thornton’s Supply Chain Advisory Services practice, the firm announced today, in a deal that closed on July 16th. The purchase includes “the addition of 23 highly-skilled, experienced professionals to KPMG” and the firm will also take over the existing projects “at select Fortune 500 companies.”

This is certainly appears to be a nice little boost for KPMG’s Advisory practiceclear whether this will be a big part of the advisory practice or an area for potential growth in jobs and revenues, TPTB seem pretty excited about it (see boilerplate after the jump).


But we think the more interesting aspect of this particular deal is the strategy of Grant Thornton. Back in January when Stephen Chipman gave his first firmwide call to the troops, he discussed many things including the not so subtle warning that some people would not be “joining us on the next stage of our journey.” That’s a pretty clear message but nowhere in the message to the firm was the slightest indication given that this, dare we say, firesale would be occurring.

This is the fifth major move that we have covered involving Grant Thornton just this year. We have reported on sales of GT’s Albuquerque, Honolulu offices as well as the closure of the Madison and Greensboro offices.

This is the first sale of a practice that we have covered and KPMG is the largest firm to be involved in one of these transactions. Moss Adams purchased GT’s Albuquerque office and partners in the Honolulu office purchased the practice to become an affiliate of PKF.

Perhaps this part of the journey was too sensitive to share with the troops or maybe it was communicated in code that could only be deciphered with a secret book with all the definitions OR maybe the majority of people at GT weren’t paying attention to anything SC said unless it included the words “compensation,” “promotion,” or “bonus.” We can’t really say.

That being said, we are still hearing rumors of other office sales by GT. Nothing we’re permitted to share with you now but if you are aware of any talk about a possible sale in your city, get in touch with us. And if you’ve got thoughts or knowledge on this particular deal – from the perspective of either firm – share below.

NEW YORK, July 19 /PRNewswire/ — KPMG LLP, the U.S. audit, tax and advisory firm, today announced it has expanded its restructuring capabilities through acquisition of the Supply Chain Advisory Services practice of Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd.

The acquisition strengthens KPMG’s existing restructuring services practice in the automotive, pharmaceuticals, aerospace and defense and other manufacturing industries by expanding current capabilities in financial and operational restructuring, supply chain advisory, supplier services, technology and performance improvement. The transaction also includes Grant Thornton LLP’s Vontik software system.

“As organizations continue to reinvigorate their focus on growth, they are facing unprecedented pressures to transform their finance and operations functions,” said John Veihmeyer, Chairman and Chief Executive Officer, KPMG LLP. “This acquisition will enhance KPMG’s ability to help businesses address the four key drivers of business transformation: people, process, risk and control, and technology.”

The transaction, which closed on July 16, includes the addition of 23 highly-skilled, experienced professionals to KPMG. KPMG will also take over existing Grant Thornton LLP projects at select Fortune 500 companies.

“As the already strong demand for large scale transformation and restructuring assistance continues to grow, this acquisition helps us provide the functional breadth and depth needed by large organizations across several key industry sectors,” said Mark A. Goodburn, Vice Chairman and Head of Advisory, for KPMG LLP. “It’s also consistent with our continuing strategy to build superior large-scale transformation capabilities to serve the world’s top organizations.”

“Adding these tactical, operational restructuring and supply chain skills to KPMG’s strategic market position is a great fit, at the right time,” added Drew Koecher, partner and head of restructuring for KPMG LLP. “With the addition of this group, we broaden and deepen our client base and add to our already extensive advisory capabilities to serve businesses as they transform their business models to be successful in this new economy.”

Attention KPMG Kampers – Phil Mickelson Needs Your Help!

We’re dispensing with QOTD today to bring you an opportunity of a lifetime. Phil’s cozy little love nest in Santa Fe, CA is up for grabs and we think it’s a grand idea for a few Klynveldians to pool their resources together to take it off his hands. It’s been on the market for two years so obviously T Fly isn’t up for it an the freshly minted honchos.

So we leave it up to you, men and women of KPMG. Get some friends together and make the man an offer. It’s currently listed at just a shade under $9 mil so it’s completely unreasonable. What you do to celebrate your new home after the close is up to you. If you’ve got suggestions for theme parties, technical accounting trainings or simply a shrine to man himself, give your best shot in the comments. But of course take a gander first….


[caption id="attachment_14359" align="aligncenter" width="560" caption="Helicopter not included"][/caption]

[caption id="attachment_14362" align="aligncenter" width="560" caption="Come on in!"][/caption]

[caption id="attachment_14363" align="aligncenter" width="560" caption="When he gets sick of Five Guys (rare occurrence)"][/caption]

[caption id="attachment_14364" align="aligncenter" width="560" caption="The Phil is great room"][/caption]

[caption id="attachment_14370" align="aligncenter" width="560" caption="Where the magic happens"][/caption]

[caption id="attachment_14371" align="aligncenter" width="560" caption="Plenty of room for Tiger\'s friends"][/caption]

All photos: Redfin

KPMG’s Risk Management Ad Jumps, Climbs and Flies but Misses the Point

Just as Washington is finally passing a bill that will reduce unnecessary risk-taking by financial institutions, here comes this commercial from KPMG in the UK doing the opposite. KPMG parties like it was 2005 and sub-prime was a bad cut of steaks. The commercial celebrates risk-taking in a manner that only a BP executive could rationalize deepwater offshore drilling.

Almost everything is wrong with this commercial:


Its heroes, a man and a woman, presumably KPMG employees, are living in a risky world. Risk is all around them, from the moment they get up. But don’t worry. These two nitwits know how to engage in risk management. Mostly in jingle and parkour, in fact.

Wikipedia tells us that Parkour “is where participants jump, vault, and climb over obstacles in a fluid manner. Skills such as jumping and climbing, or the more specific parkour moves are employed. The object of parkour is to get from one place to another using only the human body and the objects in the environment. The obstacles can be anything in one’s environment but parkour is often seen practiced in urban areas because of the many suitable public structures available such as buildings and rails.”

The two heroes run, jump, flip over and take maniacal risks along the way to the office. Along the way the tag line, “Turn Risk Into Advantage”, is reinforced by embedded messages, in case we did not get the main theme”: “Know Risk, Know Reward”, “Do You Have The Risk Appetite For Success?” “Always Be Ready For The Unexpected.”

I actually like the “Turn Risk Into Advantage.” It is clever, memorable, and summarizes nicely what corporations are seeking in risk management advice. Yet it is completely overshadowed by the flip execution and the manner that suggests that KPMG employees, and by extension KPMG, take risks haphazardly.

Besides being out of context and lacking a narrative, the commercial ends on a cheesy note: upon arriving into the KPMG office and performing obligatory back flips, the couple race up the stairs, looks over the rail, look at each other, smile, and decide not to jump and take the elevator instead. This is a sensible move, perhaps the first one in this commercial.

Risk management is an essential practice, and perhaps as this advertising suggests, more in need than ever. Yet, it is not clear to me why the issue cannot be addressed heads on and intelligently. The irrelevant “packaging” simply detracts from the appeal of the practice.

Avi Dan is President & CEO of Avidan Strategies, a New York based consultancy specialized in advising professional service companies on marketing and business development. Mr. Dan was previously a board member with two leading advertising agencies and managed another.

Lots of Appointing Going on at KPMG Today

Namely Jim Liddy the new Vice Chair – Audit; Tom Duffy – National Managing Partner – Audit; Scott Ozanus Vice Chair – Tax; and Jeff LeSage National Managing Partner – Tax.


And on such a grand occasion, John Veihmeyer gets to say lots of nice things about all these guys even though at least one of these guys is probably gunning for his position.

Jimbo: “Jim Liddy has a remarkable record of providing deep insights to financial service clients and companies in other sectors about their businesses and growth strategies, and is a proven leader. I’m confident that with his intense focus on audit quality, Jim will build on the strong audit practice that Henry Keizer created over the past five years to help ensure KPMG’s continued success.”

Tom: “As the newly named national managing partner – audit, Tom Duffy will team with Jim Liddy to lead our audit practice. Tom has considerable industry experience and a proven track record of delivering audit quality and exceptional service to our clients.”

Scottie: “We’re looking forward to Scott’s leadership during this important period for our tax practice and KPMG’s clients – as companies cope with legislative and regulatory changes, and seek clarity in complex challenges related to transfer pricing, restructuring, renewable energy and a variety of other areas.”

Jeff: “As the new national managing partner – tax, Jeff LeSage will team with Scott Ozanus to lead tax, bringing global tax experience, industry insight and outstanding client service skills to this important role.”

Congrats gentlemen. Not sure if these particular positions get you 18 with Phil or not but we’re sure they are sweet gigs all the same.

KPMG Appoints Jim Liddy Vice Chair – Audit [PR Newswire]
KPMG LLP Appoints Scott Ozanus Vice Chair – Tax [PR Newswire]

KPMG Partner Thinks It’s Really Unfair That Audit Firms Keep Getting Sued

You know what sucks? Getting sued. Ask Bill Michael, KPMG’s UK head of FS. He’s pretty sick and tired of all the sue-happiness going on in the world today. Sure, the financial crisis nearly destroyed the world as we know it but dammit, blaming auditors is downright ludicrous. Why? Because it’s unfair.

Bill Michael, UK head of financial services at KPMG, attacked what he described as “unfair”, “deep pocket” lawsuits which pay “little or no attention to the balance of responsibility between auditor and management”.

“We operate in a highly litigious environment where the balance of risk and reward has driven us to a world of caveats,” said Mr Michael. “Any corporate failure or financial loss invariably carries with it the risk of suing the auditor.”

Right. Because in law school they teach future litigators to “pay attention to the balance of responsibility between auditor and management.” Supposedly Bill Mike would like everyone to start respecting the Big 4 business model and leave them alone to do their work. Because in case you hadn’t heard, this is a life and death matter for accounting firms, you know:

“I can tell you, we are acutely aware of risk management and its consequences from both an individual and a firm perspective.

“You only have to look at what happened to a great firm like Arthur Anderson after its audit of Enron,” said Mr Michael. Arthur Anderson was eventually cleared after its audit of the collapsed energy trader, but the accountancy has already folded as a result.

He also criticised the “enormous rewards for failure” in the banking industry, drawing attention to the way some of those responsible for the collapse of major firms were able to move to other banks or hedge funds.

“The risk-reward relationship is not only lop-sided; it impairs our ability to provide broader observations,” said Mr Michael.

Describing the sometimes tense relationship between accountants and the firms they are auditing, he said that each review often started with the premise of “we don’t trust you”.

So in other words, get your witch hunt on with the banks and hedgies but leave us the hell alone. Nobody likes us the way it is.

Litigation culture is ‘unfair’ warns KPMG accounting head [Telegraph]

Bonus Watch ’10: There are Some Unhappy KPMG Kampers in California

At least it was a short week!

Looks like promotion bonuses are available to view under Self Service Connection for those who got promoted. 2nd year promote to senior (high SP rated) in specialty advisory (N. California) = 1.25% or $700 in my case. What a fucking joke…working for 2 years and I’ve been making progressively less and less money every year when you factor in a signing bonus in 2008 and a CPA bonus in 2009.

Keep in mind that the promotion bonuses are only for the “stub period” of July-September until the full year bonus/raise come into effect. I’ve also been told by numerous people not to extrapolate the stub period amount to a full year amount. Good thing they said that cause if 5% is my full year raise after 2 years of nothing, I’m out of here before you can spell GAAP.

Did KPMG Plagiarize Part of Its Atlantic Yards Market Study?

Back in the fall we told you about a market study that KPMG issued on the Atlantic Yards project.

At that time, we learned that KPMG had done some less-than stellar research on the movement of the units on Prospect Park and it got the attention of some the local blogs covering the massive development project.

Namely, the Atlantic Yards Report blog. It reported:

KPMG’s report has some very shoddy research. Consider that the report (dated August 31) claims that Richard Meier’s On Prospect Park is 75% sold. (Only rental buildings are pre-leased.)

However, the New York Times reported September 27:

While the developers say half of the building’s 99 units have been sold, the real estate Web site StreetEasy.com documents only 25 closings through public records.

AYR didn’t state it so boldly back in the fall but in a post from yesterday (as well as reports in May and June) it isn’t so nice and flat out calls the firm out for lying, “The KPMG report got very little discussion, but it contains lies–blatant, checkable lies–about condo sales.”

But wait! There’s more! We learned today from a friend of GC that not only does AYR call out KPMG for having their pants on fire, it also says that the firm got a little carried away with the copy and pasting:

I discovered when I took another look, it contains more than two pages of shameless borrowing–plagiarism that is not diminished by a vague footnote.

The entire section on New York City Market Dynamics is cribbed from The Corcoran Report(s) for Manhattan and Brooklyn for the second quarter of 2009.

Yes, there’s a footnote to the section headline that cites “The Corcoran Report–2nd Quarter 2009” as a source (click to enlarge), but there’s no indication that nearly all the text–with the slightest of changes–comes from Corcoran.

No quotation marks, no indentations, no italics.

AYR provides several examples that are oddly the same identical. We’ve presented a clip from KPMG’s report here:

And here’s Corcoran’s (apologies for the small type):

Like we said, this is just one example. Our messages (email, voicemail, in a bottle) to KPMG have not been returned at this time.

KPMG Has Gotten Tired of KV Pharmaceutical’s Financial Reporting Side Effects

Last week we ran a post courtesy of Sheryl Nash at CFOZone that discussed the tough 2010 that KV Pharmaceutical was having. Well, it’s getting worse. KPMG, not completely adverse to risk,ps and has dropped KVP like a sack of spuds.

In an 8-K rammed through just before quitting time yesterday, “On June 25, 2010, KPMG LLP (“KPMG”) notified K-V Pharmaceutical Company (the “Registrant” or the “Company”) that it had resigned from its engagement as the Registrant’s principal accountant. KPMG’s resignation was not recommended or approved by the Audit Committee of the Registrant’s Board of Directors.”

What was the problem, you ask? Where do we start? There’s a lot in this 8-K so we’ve bolded the good parts for you:

KPMG’s report on the consolidated financial statements of the Registrant and subsidiaries as of and for the year ended March 31, 2009 contained a separate paragraph stating that “As discussed in Note 3 to the consolidated financial statements, the Company has suspended the shipment of all products manufactured by the Company and must comply with a consent decree with the FDA before approved products can be reintroduced to the market. Significant negative impacts on operating results and cash flows from these actions including the potential inability of the Company to raise capital; suspension of manufacturing; significant uncertainties related to litigation and governmental inquiries; and debt covenant violations raise substantial doubt about the Company’s ability to continue as a going concern.”

The audit report of KPMG on the effectiveness of internal control over financial reporting as of March 31, 2009 did not contain any adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles, except that KPMG’s report indicates that the Registrant did not maintain effective internal control over financial reporting as of March 31, 2009 because of the effect of material weaknesses on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states “Material weaknesses have been identified and included in management’s assessment in the areas of entity-level controls (control awareness, personnel, identification and addressing risks, monitoring of controls, remediation of deficiencies and communication of information), financial statement preparation and review procedures (manual journal entries, account reconciliations, spreadsheets, customer and supplier agreements, stock-based compensation, Medicaid rebates and income taxes) and the application of accounting principles (inventories, property and equipment, employee compensation, reserves for sales allowances and financing transactions).

We’ll interject here with…why didn’t they just admit, “We have internal controls in place but they suck. Every last one of the controls is ineffective and we’re really not sure they’re being performed anyway. In fact, we don’t even employee people with accounting degrees. We have a weekend COSO crash course to get temps up to speed.” ?

Back to the filing:

As of the date of their resignation, KPMG had not completed the audit of the consolidated financial statements and the effectiveness of the internal controls over financial reporting of the Registrant as of and for the year ended March 31, 2010. KPMG had informed the Audit Committee prior to the date of their resignation that upon completion of their audit of the consolidated financial statements as of and for the year ended March 31, 2010 they expected their audit report would contain a separate paragraph expressing substantial doubt about the Registrant’s ability to continue as a going concern and their report on internal controls over financial reporting would indicate that the Registrant did not maintain effective internal control over financial reporting as of March 31, 2010 because of the effect of material weaknesses reported as of March 31, 2009 that had not been remediated.

We’d continue but it’s probably not necessary.

Promotion Watch: KPMG Hands Out New Stripes Today

A source reminded us that today is welcome to your new personal hell job day in the house that Klynveld built:

“Today is July 1st promotion day for KPMG…figured it can be a post item shoutout.”


So that’s exactly what we’re doing. Congrats to those of you enjoying a new title and feel free to pat yourself on the back below but don’t get all Sally Field on us. That’s just embarrassing.

As far as the promotion bonus is concerned…that may be another matter. But if the last three months of the fiscal year go well, who knows what can happen come fall?

UPDATE: We’ve been notified that there hasn’t been any word in at least one office (Southeast) on promotions which strikes us as strange but…HEY! anything is possible. If you’re in the dark, let us know or discuss.

KPMG Resolves Lawsuit with New Century

Francine McKenna reported briefly last week that KPMG settled the $1 billion lawsuit with the New Century Liquidating Trustee. Sure enough, we checked with Steven Thomas and he gave us the same statement:

“The New Century Liquidating Trustee and KPMG LLP have entered into a confidential settlement agreement, pursuant to which the lawsuits and arbitration against KPMG LLP and KPMG International have been resolved.”


Well! That’s some important news. We called up KPMG shortly after we read Francine’s post last week to see what they had to say about it and we were told that they’d get back to us. Unfortunately, we’re still waiting but we’re sure they’re excited, just taking the time to find the right words. Anyway, we’re here when you’ve perfected the prose. In the meantime, if you’d like to take a shot at what the response might be, pen it below.

We’ll pass along more details as they become available.

Today in Auditor Musical Chairs: KPMG and Deloitte Both Get the Boot

Evergreen Energy of Denver dismissed Deloitte effective June 23rd according to the company’s 8-K filing. Hein & Associates, a local Denver firm, will take it from here.

It stands to reason that Evergreen didn’t appreciate the going concern opinions that Deloitte gave the company for its December 31, 2009 and December 31, 2008 financial statements but in cordial SEC filing fashion, there are no parting shots from the company.


Evergreen’s press release indicates that this was simply an opportunity to throw some action to another firm (most likely with lower fees), “With the sale of certain Buckeye assets and our exit from the coal mining industry, Evergreen Energy has transitioned into a green technology company. This is an ideal time to switch to a Denver-based regional accounting firm with substantial public company expertise in the clean technology and software industries that can more cost effectively meet our needs.”

Deloitte’s letter to the SEC is abruptly admits that everything is cool rather than flat out saying, “you’ll be sorry you ever ditched us, you losers.”

Similarly, Measurement Specialties, Inc. showed KPMG the door for Ernst & Young. The company says everything was hunky-dory between the two although there was a small matter of the internal controls around a significant joint venture of which the company had no control. Oh, and the effectiveness of internal controls of some recent acquisitions also couldn’t be determined. But it was cool and the company said, “it was in the best interests of the Company to change its independent registered public accounting firm.”

KPMG has NFI what that means saying in their letter, “we are not in a position to agree or disagree with Measurement Specialties, Inc.’s statements relating to the reason for changing principal accountants.”

We wish everyone nothing but happiness.

Bonus Watch ’10: More Evidence That Promotions at KPMG Don’t Pay Like They Used To

From somewhere deep in the heart of Texas:

KPMG Dallas senior associate promotion bonus: $650 before tax. That’s down from $800 last year. Bullshit.


For those of you that don’t have a 10-ky handy, that’s a 19% drop. This correlates with the news from last month that the 1.25% for the summer bump and then a little follow up at fiscal year end.

Another source is seriously unmoved and makes an interesting point, “The bonus hardly pays for the charcoal so we can cook our Omaha Steaks.”

And just for the record, the freshly minted SAs get their new titles officially on July 1 but they should be comfortable correcting colleagues, family and clients for the next two weeks. Keep us updated.

UPDATE: Advisory out of NY chimes in:

KPMG NY Advisory Senior Associate announcements are being made by performance managers. Bonuses are a staggering $150 more then Dallas, thats $800 or 5.3% of the average salary here when annualized. I don’t dare think of what that comes to hourly with our SAS70 and Audit support busy season coming into swing.

Happy Birthday Phil Mickelson!

Philip Alfred Mickelson was born 40 years ago on this blessed day (shares with 2Pac!) and we’re guessing it will be a busy one for the reigning owner of the World’s Ugliest sports jacket.

We imagine he kicked things off with 40 Krispy Kremes donuts for breakfast, followed by a little prep round for this week’s U.S. Open, Five Guys for lunch, maybe another practice round and wrap it up a nice dinner with the fam.


All the while, screening calls from Tim Flynn who desperately wants to wish Phil a happy 40th, good luck on his quest for the KPMG Grand Slam and to congratulate him for the umpteenth time on his third Masters Tournament victory.

It really is a big week for Phil/KPMG, as the U.S. Open has dogged PM for his entire career and a good performance this week (i.e. anything less than a win is unacceptable) could vault him over Tiger Woods who has other problems.

So send some Happy Birthday/good luck/Father’s Day/thanks-for-wearing-our-hat-for-$3-mil-a-year wishes to Phil below or just let him know what you think his chances are.

Is KPMG Moving Out of DC?

Maybe! The AP is reporting that KPMG is expanding its Fairfax County Office (i.e. Tyson’s Corner) by moving people from its DC office.

According to an accountant close to the situation, “The Tyson’s Corner office switched buildings, and as a result, had a large amount of available office space. The DC advisory practice (including IRM or whatever it’s called now) moved from the M Street office to Tyson’s. I used to sit on the 7th floor whenever I worked from the office, but the place was in full move-out mode when I went in on Friday.”


Residents of the commonwealth will be thrilled to know that Virginia’s governor approved a $250,000 grant from the Governor’s Opportunity Fund for the “project.” In other words, Virginia taxpayers footed $250k to move dozens of coffee guzzling, poorly dressed 10-key tramps out of the District. And it turns out, many aren’t thrilled about it, “Advisory people are bitching about moving, especially the ones who live in the District.”

But our source also says that the rest of DC office might be packing up:

There’s rumors that the entire DC practice will be moved to Tyson’s, but I don’t know if that’s true [let’s just assume it is, shall we?]. KPMG might be the only one of the big four who still has an office in DC proper, but then again, we’re the biggest of the big four when it comes to Federal clients – and there’s a certain cachet to having that office building in Dupont Circle with the big “THE KPMG BUILDING” emblazoned on the side. [O]therwise it’s been the usual hooplah from management and torrent of “OMG SO EXCITING!” emails, and the staff I know are mostly just “meh.”

If it comes to leaving the District altogether, John Veihmeyer will probably just buy the sign and slap it on the side of his summer house. Can’t let something like that go to waste.

Satyam: Does Anyone Mind if We Take Another Three Months to Finish Our Restatements?

With just a couple weeks until the June 30 deadline for the company to issue its restated financial statements, Satyam is requesting just a little more time to get this mulligan nailed down. Three months to be precise.

Yes, they’re completely aware that it’s been nearly 18 months since the shit hit the fan. And yes, this is the third time they’ve asked India’s Company Law Board (“CLB”) for an extension on the filing but at this point they figure expectations are so low, no one will get too worked up over it.


Except for an “analyst with a leading brokerage house.” who is quoted in the Business Times, “There is no clarity on what is happening within the company. They should have at least provided the current sales figure or the bench strength. How is the shareholder supposed to rate their stock?”

Since more than a few people might be caught up in “sales figures” and whatnot, Satyam went to the trouble to let everyone know that they’re working hard, ordering in, etc. etc. so you can rest your pretty little heads:

A Satyam official said, “The records have been under the custody of investigating agencies and we recently got a court clearance. Also, our auditors (KMPG and Deloitte) told us they need some more time for the restatement. It’s only a matter of a quarter.”

See? It’s just a matter of a quarter. Plus, you can’t really blame them – KPMG and Deloitte are the ones saying they need more time. Satyam has likely been bugging them for months about wrapping up but KPMG and Deloitte are probably complaining, saying things like, “we can’t find any documentation to supports these numbers” and “this doesn’t add up.”

So, TFB if some whiny analysts don’t like it. We’ll just find out just how big of nightmare these financial statements will be in due course.

The KPMG New York Exodus Picks Up Steam

Last month we touched on a possible exodus starting in KPMG’s New York office with the news that a number of people had given their notice to leave the firm. A few readers were not impressed with the news including Hyperbole:

6 people leave a massive office in an industry that even in a slow year expects 10-15% voluntary turn. I’m all for ripping on the firms, but this is a little ridiculous…

“DAMANGE CONTROL BEGINNING: 26 FANS LEAVE LAKERS GAME AT HALF TIME

EXODUS!!!!”


However, another commenter, blah felt that this was just the beginning:

I believe the exodus is coming. Folks are pretty pissed off these days and there are a lot of career opportunities out there right now for us.

Now, here we are, a month later and it sounds as though the numbers are increasing quickly as we have had multiple sources confirm that approximately 12-15 professionals have given recent notice between the banking and asset management groups – two of the largest in the New York office. The majority being SA2s, SA3s as well as experienced managers.

Our sources have indicated that many more are actively looking and that this is not the “normal attrition” that is expected by a firm. One recent SA that gave their notice was kind enough to send us a copy of their farewell email that sounds – oddly – inspired. After drying your eyes (or throwing up in your mouth), feel free to discuss the latest conga line going out of 345 Park.

Allow me to leave you with a few words of inspiration on this most joyous day:

BLOOD ALONE MOVES THE WHEELS OF HISTORY!

Have you ever asked yourselves in an hour of meditation – which everyone finds during the day – how long we have been striving for greatness?

Not only the years we’ve been at war the war of work but from the moment as a child, when we realize the world could be conquered. It has been a lifetime struggle a never-ending fight, I say to you and you will understand that it is a privilege to fight. WE ARE WARRIORS! Accountants of New York City, I ask you once more rise and be worthy of this historical hour. No revolution is worth anything unless it can defend itself. Some people will tell you accountant is a bad word. They’ll conjure up images of used car dealers, and door to door charlatans. This is our duty to change their perception. I say, accountants of the world… unite. We must never acquiesce, for it is together… TOGETHER THAT WE PREVAIL. WE MUST NEVER CEDE CONTROL OF THE MOTHERLAND…

Let’s Welcome the KPMG Interns with…

…kind words from John Veihmeyer? Obviously! Bagels with schmear? This isn’t 2007. Happy hours where the booze flows like wine? TBD.


The Klynveld interns started this week (an official Tweet from the KPMG Go says there’s over 1,000 coffee go-fers this summer) and we hear they’re starting out with some stimulating training for a couple of days before they head to national training which we hear will be at a HoJo in Fargo, ND. Cutbacks, you know.

We know some of you KPMG vets will be asked to mentor these blades of grass and we’re a little curious about what the guidance has been re: coffee, lunches, booze etc. since TPTB are still squeeze all the hairs out Lincoln’s beard but still want you to convince the hot and/or smart interns that KPMG is the place they want to be.

Anyhoo, we’ll try and bestow some wisdom on this year’s crop with some key thing to remember:

1. Get things started off right and start kissing the new managers’ asses.

2. Business casual does not consist of sweat pants.

3. If we send you on a scavenger hunt, try not to make it obvious.

4. Showing up with booze on your breath isn’t allowed until you’re well into your first year as full time employee.

5. We’re out of ideas… help them out.

PFF Bancorp Creditors Want to Probe KPMG So They Can Determine if They Can Sue KPMG

In anything is better than the shit BP has on its hands news, Reuters reports that creditors of PFF Bancorp Inc are requesting permission from a U.S. Bankruptcy Court in Delaware to snoop around “information in KPMG’s possession” to find out what the firm knew about PFF’s over-leveraged, under-capitalized, risk-loving ways.


The company’s committee of unsecured creditors wrote in their request that “Information in KPMG’s possession may support potential claims against third parties and against KPMG itself, if, for example, it becomes apparent that KPMG knew or should have known at an early date of any overly-aggressive or inadequately-controlled loan practices of the (company).”

So in other words, PFF would like to – pretty please – sue someone’s ass and they’d like to confirm whether or not KPMG will be a good candidate for said ass suing. So assuming the bankruptcy court gives them the thumbs-up, PFF will send in the hounds to find out what’s what. And they’ve covered themselves nicely by using the wonderfully subjective “knew or should have known” so KPMG’s only option will be to invoke the “we were duped” excuse, which isn’t such a flattering option.

KPMG didn’t respond to Reuters’ request for comment or our email but we’re guessing they’re less than enthused about sharing what is in their audit workpapers. Not necessarily because the documentation will have a smoking gun but more so because they might discover that the partner on the engagement has a bad habit of doodling and that’s just embarrassing.

PFF Bancorp creditors seek probe of auditor KPMG [Reuters]

It’s Ridiculous to Think That Enterprise Financial Dismissed KPMG Because of the Restatements

KPMG has been kicked to the curb by Enterprise Financial according to an 8-K that was filed on Friday by the company. The ubiquitous claim of “no disagreements with [insert firm]” was there along with a mention of a material weakness that was related to the restatements issued for both 2008 and 2007 but that couldn’t possibly have anything to do with the dismissal of the auditors:

In connection with the identification of the loan participation accounting error described in Item 7, Management Discussion & Analysis and in Item 8, Note 2 of the consolidated financial statements and elsewhere in the Form 10K dated March 16, 2010, the Company also determined that a material weakness in its internal controls over financial reporting existed during the periods affected by the error, including as of December 31, 2008. The Company’s management concluded that the material weakness was the Company’s lack of a formal process to periodically review existing contracts and agreements with continuing accounting significance. To remediate this material weakness, during the fourth quarter of 2009 the Company implemented a formal process to review all contracts and agreements with continuing accounting significance on an annual basis. As a result of the review conducted in the fourth quarter, management did not identify any other errors in its previous accounting for such contracts or agreements. Management believes that this new process has remediated the material weakness in the Company’s internal control over financial reporting.

So in other words, “Yeah, maybe we should have been looking at these contracts but we weren’t and so some material misstatements slid through. We’ve slapped some duct tape on it and it’ll be fine from here on it. End of story.”

The esteemed pleasure of auditing Enterprise now belongs to Deloitte who has now snagged three clients from KPMG this year (by our count) – picking up Jefferies and Select Comfort back in March.

Enterprise Bank parent dismisses KPMG [St. Louis Business Journal]

KPMG’s Investment in Phil Mickelson Is Working Out Pretty Well, Sayeth KPMG’s Leadership

We just assumed that we had heard the last of the cubicle-side chats with KPMG’s leadership but lo and behold, this morning we find yet another convo with KPMG’s three amigos – T Fly, JVeih, Keizer Soze – sitting in the mailbag.

And yes, Phil comes up.


KPMGconversation

Okay, some thoughts –

In response to Inquisitor #1, Johnnie V. says “our goal is to make sure to not sell services into a company” but then qualifies by saying, “[Making] sure we’re bring the full suite of..services to help them deal with those issues and those problems.” In other words, there is a very fine line between hustling clients for more business and actually serving them to suit their needs.

Re: “Mid-market” – This can be summed up by saying: KPMG is having the most success winning smaller clients from the next tier firms.

And finally to the most important question – Inquisitor #3 thinks Phil is great and all but for the love of everything that is good and holy, are there any other plans to get the name out there? This Five Guys obsession has him worried.

Since Tim and Phil are BFFs, he’ll take this one…except he doesn’t say anything that really means anything. JVeih jumps in (no doubt give him the “WTF are you talking about?” look) to say that KPMG’s Mean Girls strategy is working and the firm is getting far more attention from CFOs than it was just one year ago. The rest of the Big 4 have plateaued and Phil has been instrumental in the glad-handing and back-slapping efforts.

Memo to the World: You’ll Just Have to Live with the Big 4 Whether You Like It or Not

“[T]here are plenty of industries where there are four big players. The world just has to get on with it.”

~ John Griffith-Jones, chairman of KPMG in the UK and co-chairman in Europe on the concern that four accounting major accounting firms are not enough.

Promotion Watch ’10: Latest Details on KPMG’s New Managers

From a Klynveld Quaker:

In recent meetings with PA Business Unit leadership with all audit staff (i.e. A and SA’s), we were told that of the 32 inidivudals up for promotion to Manager in the combined three offices (Philly, Harrisburg, Pittsburgh), that 22 were officially promoted. Of the 10 that weren’t, at least 1 just came back from international rotation, and either 2 or 3 (can’t remember which) hadn’t passed the CPA exam and therefore couldn’t be considered for promotions. All raise and bonus theories were squashed (as to hard percentages), though we were told to expect some form of raise as well as variable comp at FYE.


So just a shade better than two-thirds of the Keystone KPMGers eligible for manager will be in the new manager class. As you may remember, this is pretty close to the breakdown for one office in the Rockies but a little less than an office in the northwest.

Since the firm has four months to go in its fiscal year, the fact that the local leadership wouldn’t even give a hint comes as no surprise. That said, it hasn’t stopped people from speculating about what they think the increases will be. We encourage you to share what you know, what you’ve heard, or your own wild-ass guess. And keep us updated with the latest in your office.

KPMG Is Getting Hot Over Some of Your Comments on Summer Blast

We don’t need to remind you that there is a long weekend coming up. In fact, some of you may be bolting later today so you could get a jump on a weekend full of bad decisions.

Sensing your anxiety, KPMG wanted to let you know, that contrary to what some people are saying, there are plenty of Klynveldians who are pleased – nay – ecstatic about the KPMG’s Summer Blast.

It’s been suggested to us that “[The] Radio Station engages in masturbation over Summer Blast” which seems about right. The only other thought we had was of John Veihmeyer printing out the most glowing comments and writhing around in them on a conference table (with the Notre Dame fight song playing in the background).


We received the communiqué and have included some of the comments for your own pleasuring purposes:

“I am a long-time employee of KPMG, over 23 years, and have seen a lot of changes occur over that time. I most appreciate the Employer of Choice initiatives that have transformed this firm and made it truly a great place to work. I think it’s the best campaign ever devised by the firm.”

“I’m so happy to see some of what makes KPMG a great place to work is back! It really made my week – made me feel more confident about the future, made me feel like all the hours and hard work are appreciated, and made me even prouder to say that I work for KPMG.”

“Great news to receive on a Monday morning! Thanks so much for the Summer Blast email; I must admit that it has been quite the buzz since the first teaser email was sent. Good to see colleagues hypothesizing about what it could be. Thanks again for the benefits provided through Summer Blast!”

“KPMG ROCKS!!” [Submitted by Tim Flynn]

“I think this is AWESOME that KPMG cares this much about their employees. While other companies are more into ‘what is best for the company,’ OUR firm is saying ‘what is best for our people.’ That goes a long way with me!” [Easy on the caps, Kanye]

“This is such great news! There has been lots of speculation of what Summer Blast would be. The entire package has exceeded our expectations! What an awesome way to start the summer! The staff really appreciate the acknowledgment of our hard work these past few years! Thank you!” [Speaking on behalf of the staff seems presumptuous]

If you don’t see your thoughts here but would like share, fire away.

John Veihmeyer Wins One for the Gipper

[caption id="attachment_10529" align="alignright" width="150" caption="But how does he feel about Charlie Weis getting fired?"][/caption]

A few weeks back we presented the BusinessWeek ranking of accounting programs that found Notre Dame at the top. At first we just figured Touchdown Jesus had something to do with it but now we have reason to speculate that a divine carpenter had nothing to do with it.

Since KPMG Chairman-elect John Veihmeyer was recently named alumnus of the year by Notre Dame’s accounting department, some people might assume that JVeih did a little lobbying of the BusinessWeek folks in order to earn the top spot and perhaps this is South Bend’s thank you for the kind words.


Whether this back-scratching theory has any weight to it is up for a debate but what we know for sure is that some lucky Irish students/future Klynveldians got to hear JV speak recently at Notre Dame Stadium and some inspiring words were shared:

During his remarks, Veihmeyer used his own educational roots and career experiences to remind students what a unique opportunity they have had at Notre Dame and how it will benefit them on the road ahead. His audience listened in rapt attention. While the average college student would have paid just to have dinner in Notre Dame Stadium, these students knew that getting career advice from the Alumnus of the Year and CEO and future Chairman of a Big Four Accounting Firm was priceless.

From the sounds of it, the speech was the KPMG equivalent of this:

One Office Will Be Enjoying a Bonus Denim Day During KPMG’s Summer Blast

Last week we were notified that KPMG’s Summer Blast would soon be in full swing and that details would be forthcoming.

TPTB obviously sensed your anxiety about the details and we’re happy to report that we have the details via the Silicon Valley office. And KPMG SV seems pret-tay, pret-tay excited that two days out of your (presumably) five day week will be spent sporting only 50% of the biz casual uniform.

This Summer, Have a Blast on Us!

Our firm is slightly ahead of plan at this point in our fiscal year, and it’s due in large part to your hard work, teaming, and market development focus. Looking ahead, your continued commitment is critical as we push to meet our business objectives for the year.

In appreciation of your efforts, and to help you to recharge your batteries so we can meet the challenges ahead of us, we’re excited to announce KPMG’s Summer Blast!, a program of food, fun, and perks that lasts all summer long and features:

• A Summer BBQ gift that includes a selection of steaks, chicken breasts, sausage, burgers, and gourmet franks

• The return of Summer Weekend Jumpstart

• The introduction of firmwide Blue Jeans Fridays – Given our office already enjoys Blue Jeans Fridays, as part of Summer Blast, the Silicon Valley Office will also have Blue Jeans Mondays for the duration of Summer Blast!

• The return of the Vacation Photo Challenge

To redeem your BBQ gift and see what all the fun is about, visit our Summer Blast Web site. And keep checking out the site in the coming months to see what’s hot this summer.

We hope this Summer Blast! helps you to enjoy and recharge this summer, so we can all pull together as a team, do our best work, and finish 2010 even stronger than we started it.

Have a great summer! And thanks again for everything you do for the firm, no matter the season.

Typically there is some sort of acknowledgment of the vegetarian/kosher crowd but this particular message glaringly omits it. We’re sure there’s an alternative but in the event that you non-meat eaters are SOL, please inform.

Speaking of meat, some Klynveldians had made it known that they’d prefer to buy their own flesh for consumption by way of a bonus or something like that. If you’re staying with that narrative, kindly elaborate further.

(UPDATE): We’ve now learned that if you want vegetarian and/or kosher options, you’ll have to ring up Omaha Steaks yourself. You vegetarians can expect an uncooperative customer service rep subsequent to your, “I don’t eat meat,” revelation.

KPMG’s New Paperless Audit Is Going to Be the Best Thing Since Paper

[caption id="attachment_10529" align="alignright" width="150" caption="Paperless!"][/caption]

How about one more convo with the KPMG leadership this week? As one commenter mused earlier, the lack of past CEO spreadsheet-side chats were too few and far between so we figure we’re doing a you a favor by this passing ��������������������round, John Veihmeyer and Henry Keizer kick around lowballing fees, outsourcing and the firm’s new paperless audit technology:

Inquisitor 1: Can you talk a little bit more specifically about what we’re doing right now to compete with firms that are reducing their fees so drastically that you have to wonder how they are even covering costs?

Keizer: To me, the first and foremost guiding principle is – make sure you’re giving the most absolute best client service. I think to the extent that you do have great service, we’ve got to be able to have very transparent and open discussions with our clients as to what are our economics? Where are we? What is the competitive information? What is market pricing, as opposed to the offer that came in unsolicited? And find a way to meet the objectives of what we need, and what our client needs.

Maybe we will, in fact, have to drop a price in, let’s say, our audit offering. But then are able to say, but why can’t we maintain the same or higher KPMG spend? Let’s look at who’s doing your tax compliance work. Let’s look at who’s doing your SAS70? Those types of discussions do allow us to compete successfully without having a case where it’s just about price.

Not sure who transcribed this thing but it’ll work for a Friday. First off, Inquisitor numero uno is obviously under the impression that KPMG would never lowball its fees. Even though other people have suggested exactly that.

Keizer Soze then reminds his little friend that it’s really not about the money, it’s about providing the best client service imaginable (sacrificing life, limb and/or dignity) which will result in more work for the firm. It’s a self-perpetuating cycle, really.

Inquisitor 2: Is there more plans to outsource positions in the U.S. to India?

Veihmeyer: I think as you look across the entire scope of our activities, and I think the most important one is – how do we serve our global clients – making sure that we are competitive in the marketplace and can think about how we execute a lot of our engagements differently to be successful. I think we will continue to look for opportunities to source talent, source resources, source skills, anywhere in the world it makes sense. I don’t see it as exchanging a position here for something offshore.

I think we see this as a very key strategy to make sure we are as competitive as we can possibly be in the marketplace—which I think will have one primary impact to the U.S. firm and that is create more opportunities for our people here. And why is that the case? Because we will win more work, we will be competitive in situations that we otherwise wouldn’t be competitive in, if we didn’t have that capability. And that’s what creates opportunities for our people.

In a word: Yes. As for why – Dammit, we’re a $20 billion firm (but not really, we’re actually a network of independent firms operating under a global cooperative. Ask Tim Flynn; he’ll tell you) and our competitors play hard ball. We’ve got to create other jobs overseas to keep up with those guys. Will that affect you? No chance, Blanche! If it does, it just means your life will be infinitely better because KPMG has business it didn’t have before.

Inquisitor 3: eAudIT – how is it going? What challenges have we faced? And how are clients, employees, and recruits receiving the deployment?

Keizer: e-AudIT is on track for deployment. We released the software in April, the 2010 version. Training schedules will be rolling out over the next several months.

It is the tool that accomplishes three major things. One, it allows us to do things more efficiently. It moves us from a work paper format to a work flow.

And lastly, there’s always been a great appetite of our professionals, how do I tap into the knowledge that KPMG has? e-AudIT is the platform now, to actually make that knowledge available to our professionals.

I think e-AudIT puts us in front of our competitors in terms of a platform that’s truly the best that’s out there. I believe when we look back, it will be the single most important ingredient to us providing the type of service, meeting our regulatory and professional requirements, and having our people feel good at how we have enabled them to really be high performance professionals.

[Jesus, easy with the rapid fire, Inquisitor tres; Hank isn’t a speed listener]. Paperless auditing has moved into KPMG lock, stock and barrel. We’re only 10 years into the 21st Century and we’re ready to start fixing bugs in this thing for the next ten years.

It’s far superior to anything the other firms have because you’ve been training on it over in Monty and we haven’t heard a single complaint. Someday you’ll be able to tell your grandstaff that this was the absolutely most exciting time to be at KPMG because that was when things got serious.

Follow Up on KPMG Compensation and Promotion News

It’s been, in the words of one source, “a hell of a week” at KPMG. John Veihmeyer & Co. have been on a whirlwind communications tour, people up for promotion are getting the good/bad news and the whole summer blast thing has people soiling themselves with excitement.

Since they’ve been on such a tear, we’ll update you with a little more news out of the House of Klynveld, returning to promotion and compensation news.


First the bad news – we’ve learned from multiple sources that newly promoted SAs in the audit practice won’t be getting much of a merit increase for their new positions. The news is that the new promotees will receive an early 1.25% increase later this summer that will be followed up by another increase, although those raises will be subject to the firm’s performance in the last part of the fiscal year.

Now the good news – After hearing from a couple offices in the west, most of the SA3s that are up for the promotion to manager seem to be getting the bump. From one office in the northwest:

Despite rampant speculation about widespread non-promotion of seniors to manager, only 3 (of around 15) 3rd year seniors didn’t get the bump. One CPA licence issue, and two performance issues. Nothing out of the ordinary even in a regular year, let alone in one where the holdbacks are supposed to be so numerous that they are creating a new 4th year senior training.

The percentage of SA3s in a Rocky Mountain office that are getting promoted is a little lower with approximately two-thirds of the class getting the bump. So far, only the (un)lucky (i.e. non-promotees) ones have received the news while the new managers continue to sweat it out. For this particular office, the decision to promote/not promote was a little more confusing that its counterpart in the northwest.

Based on the information we’ve gathered, each office is essentially given a number of promotees by the boys at 345 Park and the local office leadership is tasked with figuring it out from there. Criteria for promotion to manager (as we understand it) is that 1) the eligible SA needs to be “ready to be a manager” and 2) they need a business case (i.e. have clients to serve).

In the case of this office, it sounds like this was scrapped. Rather, it was decided that historical rating was the determining factor and not the criteria we outlined above. In other words, if you received high ratings (“EP” at KPMG) as an SA1 and SA2, that was more important than whether you actually have clients to work on as a manager. If you were in the meaty part of the curve (“SP” at KPMG), despite your strong “business case” you are SOL. Our source told us that, in the past, they were always told that “my historical rating would not be a determining factor when it came to promotions.”

So basically it boils down to how your particular office is doing. If you’ve got a strong market with plenty of clients, things should go fairly smooth (with a few exceptions). If you’ve got a competitive or shrinking market, your odds of getting the bump go down, in some cases, way down.

As always, keep us updated with your office’s developments, and congratulations and good luck to the new SAs and Managers!

Let’s Speculate About What KPMG’s Summer Blast Is

Because we asked around and no one has a clue.

KPMGsSummerBlast


But we’ll take a stab at it:

A) More communication blasts from JVeih and Co.

B) Flying all Klynveldians to watch Phil Mickelson continue his Grand Slam tour (and in the process, win back his love).

C) Pool parties at your local OMP’s pad.

D) Doing some hallucinogenics and running through a sunflower field:

E) You tell us.

Exodus Watch ’10: KPMG New York

From somewhere deep inside 345 Park Ave:

“Damage control beginning – 3 managers and 3 SAs out.”


It’s our understanding that this is the audit side of the house in financial services. No indication at this point whether it’s promotion de-nied related or if it’s has something to do with the unconfirmed compensation rumors we’re hearing.

If you’ve got details on comp, promotions, or lack thereof, email us with the details.

KPMG’s Leadership Is Not Determined By Rock-Paper-Scissors

KPMG Leadership has been on a communication rampage this month, answering questions from inquiring Klynveldians about the firm’s performance and compensation.

This time around, thd by COO Henry Keizer) discuss their roles in the firm and the election process because, presumably, it might make for a good ice breaker at your upcoming Memorial Day BBQ.

Inquisitor 1: Congratulations on your new roles – Chairman and Deputy Chairman. What can you tell us about the process that you go through in having that occur? And what’s the differentiation between your two roles?

Flynn: The board has a responsibility to have a succession planning process in place to elect the Chairman and Deputy Chairman. That is then put to an up or down vote of the partners for ratification. Chairman and Deputy Chairman are – today – a five-year term jointly and then a three-year second term, should they so choose. The board elects them to a second term.

John and I were elected in June of 2005, for a five-year term. I was elected as Global Chairman on October 1, 2007. I came to the conclusion through the fall that I really couldn’t do both roles full time.

In recognizing that in a complex, changing world today, we really need a full-time U.S. Chairman and Deputy Chairman to take care of what has to get done here in the world that we’re in—and as well, we’ll talk more about it, but we have to evolve the global firm, a $20 billion organization – shouldn’t there be a full-time executive team that wakes up every day on how to carry out the responsibilities of a $20 billion organization?

Veihmeyer: In terms of specific responsibilities – as Chairman, I’m the CEO. Henry chairs the Management Committee and a lot of what we talked about in terms of executing effectively and making sure that we are – from an operational standpoint – a very high-performance organization, Henry will lead through his role as Chief Operating Officer.

In other words – the process at KPMG isn’t exactly the electoral college. It’s basically a fight until the (near) death and the winner gets the thumbs up/thumbs down, Gladiator style, from the Board. Then they shake hands, slap each other on the ass, etc. and get back to work.

For this past cycle it does sound like T Fly was a little burned out from the globe trotting and keeping the peace Stateside so it was natural for JVeih to step up to the big chair for the U.S. after the terms expired. A $20 billion company is nothing to sneeze at so we thought that maybe we should start taking this “global firm” thing seriously (even though we’re all independent of each other and are legally not one firm) and let somebody tackle it full time.

Inquisitor 2: How will the succession process work within the next three months?

Veihmeyer: In terms of the specific things that have to take place, obviously we have some things around the leadership team that we have to get in place. Henry comes out of his role leading our Audit practice. So we will get all that in place as we lead up to early June, what team will be in place as we go forward post-June 10th, leading the firm. Henry…

Keizer: The transition that Tim and John described sets us up in a very good position to make sure as we move through fiscal 2010, we won’t be focused internally. It will allow us not only to continue to build on the foundation that we’ve built over the past several years, but more importantly, to really stay focused on making sure when we look back on 2010, it will be a year where everyone could say we’re on our way to recovery. The things that we all want, in terms of a more vibrant business, more rewards for our people, are all beginning to come back into the picture, and that that’s what we’re all committed to, I’m sure.

We’re taking applications for Hank’s position. You have to be able to stick to talking points, send out a mass amount of emails (via admin assistant natch) and smile a lot. Oh, and you can’t gush when Phil shows up for photo ops; you’ve got to keep it cool.

John Veihmeyer Doesn’t Mind Repeating Himself if It’s About Raises at KPMG

While some people are still sweating out to hear if they’re part of the new manager class, John Veihmeyer and Henry Keizer did more casual chatting with the troops and this time it was about everyone’s favorite topic to bitch about – compensation.

Specifically, somee asking about raises for FY ’10 and 401k match. Strange thing is, JV has already addressed the issue of KPMG raises in a previous communiqué by saying:

“[B]y year-end, we fully expect that the pickup in market and business conditions will drive compensation increases for the vast majority of our people. Also, assuming we meet our plan, as we are on track to do, our goal is to enhance our variable compensation pool from last year—meaning higher bonuses than last year for EP performers as well as bonuses for deserving SP performers.”


Good thing he doesn’t mind repeating himself:

Inquisitor #1: I was just wondering, if it’s likely that employees will get raises this year?

Veihmeyer: We are very optimistic at this point that that is exactly what’s going to happen. We all need to stay really engaged in what’s going on in the marketplace at this point to make sure that the second six months of our fiscal year also tracks the plan that we put in place. If we do that, we are very committed to sharing the rewards appropriately across KPMG.

As we assess the market right now – means that the vast majority of our people will be getting compensation increases this year. We are just as committed to increasing that variable compensation pool to the maximum extent we can reflective of how our results play out over the next six months.

Keizer: And in terms of variable compensation at the EP level that will translate into larger rewards and our deserving SP performers will also receive compensation rewards.

I am confident – based on what we see out in the marketplace, the foundation we have within the firm, the indicators of economic vibrance that are coming back – that we will be able to reward our people better and to be able to restore some of the things that we had to eliminate in a very measured and prudent way.

And John Veihmeyer was just wondering why you didn’t read his previous statement (or websites where it might appear) on the matter. Since V seems like a nice guy he managed to say what he said before only this time without saying “Yes” outright. Whether the absence of this explicit confirmation is a cause for concern can only be determined by you. Hank chimes in about the bonuses, presumably so he doesn’t feel awkward (at least that’s how we picture it).

So what about the 401k match? Is that returning to pre-financial apocalyptic levels?

Inquisitor #2: You mentioned earlier that we recently brought back the Standing Ovation award into the Encore program. Can we expect to see a change in our 401K match?

Veihmeyer: With an eye toward maximizing the immediate financial rewards to our people – to a level that we all can feel good about – we have some goals and objectives around base and variable compensation that in our view will take precedence over 401K as we reinstate and are able to shift those rewards. But it’s something that if the circumstances change and our ability to reinstate some of those things evolve, we will continue to look at it.

In a word – No. First things first you rubes – We’ve going to get every single Klynveldian feeling great about their immediate financial rewards. Until that is accomplished, your retirement will have to wait. The time frame of “we all feel good” was not given.

Is It Possible That KPMG Isn’t Phil Mickelson’s Favorite Sponsor?

[caption id="attachment_10491" align="alignright" width="260" caption="Is that Five Guys?"][/caption]

We realize that the above statement will likely result in an army of KPMG lawyers threatening this here site with libel and possibly putting every single person associated with GC in mortal danger but the question needed to be asked.

At the Players Championship, the freshly jacketed Phil said the following, “I grew up on In-N-Out. I thought that was the best burger until I had Five Guys. That is hands down the best burger I’ve ever had.”


At first this may seem like an over-eager chubby man enjoying a newfound joy in life. The guy is happily married, so he’s not going to make like Tiger and bang all the Laker Girls or anything. Anyhoo, it turns out that Phil failed to mention that he hearts Five Guys so much (apparently he went there SIX DAYS IN A ROW last week) that he dropped some coin into the franchise.

Fellow duffer Stewart Cink caught wind of Mick’s little endorsement of FG and took it upon himself to let the cat out of the bag:

We don’t watch a lot of golf but we do know that Phil pulls some decent scratch putting those four squares on his head. And we’ve never heard him say a single word about the kick ass professional services put forth by all you Klynveldians out there.

Of course this doesn’t really mean anything, Phil could have a special place in his heart saved just for KPMG but he’s just not able to verbalize it. That’s probably what it is.

Phil Disclosure: Mickelson Owns Five Guys Rights [CNBC]

Promotion Watch ’10: KPMG Announcing New Managers This Week?

While the timing seems early (Klynveld is on a 9/30 FYE), there has been a lot of chatter about the announcement of this year’s class of new managers happening this week.

From a Tim Flynn foot soldier close to the situation:

Heard on Monday that national was supposed to communicate yesterday or today, with communication to us this week.


And as you might imagine, there is some anxiety out there:

I’ll tell you one thing, the SA3s that don’t get promoted, they better get a ridiculous compensation package at the time they tell us we’re getting fucked. Otherwise, we’re all leaving. Two years in a row taking it up the ass from Uncle Peat? No thank you.

That’s the word from an office in the western region. Back east, there seems to be less concern:

DC already [announced], or everyone already knows, at least. Anyone with the requisite number of years and their CPA was promoted but DC has been bleeding employees lately. Everyone’s quitting or going on rotation at the senior and manager levels. Mostly quitting.

And what about those SA3s that don’t get the bump because A) they aren’t particularly popular or B) don’t have their CPA? Turns out KPMG is prepared for that. We’ve learned that the firm is offering a new training this summer specifically for SA4s. Soooo, we imagine that training could have some discussions that goes like this:

SA4 #1: Skipped over?

SA4 #2: Failed FAR three times. You?

SA4 #1: Was told that I’m “not quite ready” (hand quotes, eye roll) and that the 4th year will better prepare me for manager.

SA4 #2: Sucks.

SA4 #1: Sucks.

Keep us posted if you get the yay or nay in your office.

UPDATE: To answer a question in the comments, this is for the audit side of the house. If you’re tax or advisory feel free to weigh in on your own promotion possibilities.

KPMG Chips in as Countrywide Picks up $600 Million in Settlement

Investors who lost money in King Oompa Loompa’s house of no hassle mortgages announced that they have reached a $624 million settlement with KPMG and Countrywide. Maybe that’s why the Kaptains of Klynveld were in such an optimistic mood.


KPMG’s share of the settlement was $24 million which hardly seems worth it. Think about it. Bank of America could probably cough up an extra $24 mil without any trouble and KPMG would probably be fine not cutting a check at all. It’s just like your friend that hassles with you over the check at, “My share was only $18.25.” Eventually you just tell them to f**k off and pay for the whole thing yourself.

BofA’s Countrywide in $624 mln lawsuit settlement [Reuters]

John Veihmeyer and Tim Flynn Would Love To Tell You How KPMG Is Doing

This time of year, the leadership at your firms are on a communication offensive because you all just went through hell. They want to whisper sweet words in your ears so that you keep the faith in them and your firm.

Today we bring you a little taste of some of those sweet words courtesy of the C-suite at KPMG.

Newlynveld, John Veihmeyer was joined by Tim Flynn, COO Henry Keizer, along with some inquisitors for a grueling Q&A that should re-energize you for summer.

Conversations with Leadership
How Are We Doing?

Flynn: First one up gets the mike.

[Prepackaged Inquisitor #1]: Are we on track? How is it going? What challenges have we faced?

Flynn: I think the foundation for recovery is being laid. And I think it started, obviously, in Asia. It’s moving its way through the U.S. Things are better than people had predicted three or four months ago. And we saw retail sales today came out with improvement – consumer confidence being up. So all of those things are signs that we’re on a path for recovery. And now the question is, how does that translate into our business?

Veihmeyer: We’ve built a plan that was consistent with our expectation of what that marketplace was going to be. First half of the year continuing to be a very challenging marketplace, with a gradual increase in marketplace activity as we got into the second six months of our fiscal year. So what have we seen to date? Our results have tracked what we expected. We are actually slightly ahead of plan, six months through our fiscal year, which is the great news.

And I think everyone should feel really good about that, particularly as you look at what we’re seeing in some of the businesses – Advisory, which was clearly hard hit by the lack of spending and the curtailing of a lot of initiatives on the part of our clients, have had very strong months the last several months. And that corner seems to have absolutely turned.

And we are just beginning to see, I think, the things that really impact Audit and Tax around some of the transactional activity that really drives those incremental services that make a big difference in Audit and Tax – that’s starting to come. We expect that to translate into greater revenue over the second six months.

Quite the trifecta of vague brainteasers PI #1 had. But without being very specific, and using a couple of banal metaphors, JV and T Fly are confident that everything is cool, thanks to China and India. Europe isn’t worth mentioning, that’ll blow over. Advisory was on its deathbed but things are bouncing back. Audit and Tax are far less sexy but they’re cash cows. They might see a little more action if Advisory started showing more skin.

[Prepackaged Inquisitor #2]: My name’s [Prepackaged Inquisitor #2]. I just wanted to ask about the new role of the office managing partners, focusing on just going to market.

Keizer: By focusing the office managing partners really on two areas: one, growth of our business, and also our people. So the office managing partners teamed with the functional leaders, and the professionals within geographies, and looked outside into the marketplace, and which companies fit that criteria—impactful to our brand, our people, great growth, and profitability opportunity.

From that exercise, across the country, over 1,600 companies were identified. A process was then undertaken to actually assign specific resources. As we sit today, and we take that population of companies and say, how are we doing? The revenue growth that has been realized in our first six months, in that population, has exceeded our normal portfolio of clients. So it’s showing, again, at an early stage, focus, and a prioritization of where we want to strategically go, does translate into opportunity and revenue.

Flynn: If there’s one message that comes out of this, just one message to everybody here listening – is that the one thing we know for certain—we are not short of opportunities.

We have tremendous opportunities what’s happening around the world. The key is, how do we align our resources, look at our investments, develop our people’s skills to capitalize on those opportunities? So from a standpoint of the future – there’s tremendous opportunity for all of you, and for our businesses, as we go forward.

Your local bigwigs are out there digging up biz because things have gotten a little more competitive than we would like. We can’t simply rely on a sexy Masters Champion in every RFP so they’re getting their hands dirty for a change. Plus, from where we stand, there’s plenty of business out there so if they don’t get the job done, we’ll probably go to the bullpen.

(UPDATE) Friendly Reminder to TierOne Bank: Today Is the Last Day to Get Your Act Together

Catch up, we covered this on Sunday night: In a bizarre piece of auditing news released late on a Sunday night, KPMG has verbally resigned as Nebraska-based TierOne Bank’s independent auditor, withdrawn its audit opinion for 2008 and taken back its review of TierOne’s financials for the quarter ended March 31, 2009. Citing risk of material misstatement, KPMG has also warned the audit committee that TierOne’s financials are not to be relied upon by investors.


Well today is April 30th and that means TierOne has run out of time to get its shit together to please the OTS. Meanwhile, KPMG is still paddling away in the lifeboat before the ship sinks but with a week’s head start, we’re sure they’ve gotten far enough away from the scene of the crime to be entirely unaffected by the outcome, whatever it may be.

In a textbook case of he said/she said, TierOne is a little butthurt that KPMG would suddenly change its tune and bail on the bank so close to such an important deadline. Adding insult to injury, KPMG claims that TierOne destroyed a document on specific reserves required by the OTS, even though the auditors had requested the document more than once. TierOne claims that it gave the document to both the OTS and KPMG as requested. TierOne also enthusiastically states that not once did KPMG express any concerns about the bank’s condition until just before bailing on the bank and resigning from the audit.

We’ll update if the FDIC moves in later this afternoon and takes down TierOne.

UPDATE: TierOne tried to sell itself to Great Western Bank but the deal was shot down by the OTS. The $2+ billion bank is sort of just sitting there exposed in the open without an auditor and no real plan, you can pretty much guess what happens from here. Meanwhile, it was a busy Bank Fail Friday but TierOne was not among them. See you next week?

TierOne sale plan due today
[Lincoln Journal Star]

John Veihmeyer Gets a Little Mysterio About His Path to the Top of KPMG

New KPMG Chairman (and US CEO since 2008) John Veihmeyer told the Washington Post about growing up to ascend the public accounting ladder and if that’s something you’re looking to do with your life, be sure to check it out.

Since some of us would rather sip on Molotov cocktails and scratch our eyeballs out with sharpened #2 pencils, we can merely press our faces to the glass to see how public accounting really works. According to J Veihm, it’s something like this: once you’re jumped in, there’s no getting out.

One of the very best pieces of mentoring advice I ever received was to “view a challenge as an opportunity” and then “take it on and do it better than anybody else.” I recall one specific moment, when KPMG’s leadership asked me to consider accepting a particular position that, at the time, I thought would be something of a roadblock to achieving one of the goals I had set for my career in public accounting. I shared my concerns with a trusted colleague, who I have long considered to be my professional mentor, and his response has stayed with me over the course of my 33 years with KPMG. He said, “look at this challenge as an opportunity, accept it, and then do it better than anybody before you ever has.” I took his advice, and he was right. In hindsight, the experience I gained in that role did more to prepare me for the rest of my career than anything else I could have done.

Translating that, if you express concerns about the gang shoving you up the corporate ladder by sending you on your own drive-bys or whathaveyou, one of the higher officers will reassuringly pat you on the shoulder and remind you that there’s one way to go and that’s up. Accept it, there is only one way out (for gang members, that usually means getting shot to death; in public accounting, it might mean a heart attack at 45). Creepy.

KPMG knows all about challenges so it’s probably a good thing that Johnny V was groomed in advance for his duties as KPMG Chair.

KPMG Resigns as TierOne Bank Auditor

In a bizarre piece of auditing news released late on a Sunday night, KPMG has verbally resigned as Nebraska-based TierOne Bank’s independent auditor, withdrawn its audit opinion for 2008 and taken back its review of TierOne’s financials for the quarter ended March 31, 2009.

Well damn, we’re fairly sure it couldn’t get any worse than that for TierOne, could it?


Citing risk of material misstatement, KPMG has also warned the audit committee that TierOne’s financials are not to be relied upon by investors. Even Overstock.com doesn’t get that kind of treatment.

Last month the Office of Thrift Supervision – TierOne’s primary regulator – gave it until April 30th to merge with or sell its assets to a healthier financial institution so we’re going to go out on a limb here by assuming that they aren’t going to have good news come Friday and KPMG is just doing the responsible thing by backing away from the mess with a week left.

KPMG Got Fired by North American Savings Bank After Six Months on the Job

Technically, if you count the days (based on the 8-K) it’s less than six months.

The reason? Without getting too wonky, it appears NASB wasn’t thrilled that KPMG challenged their valuation method of a real estate investment, Central Platte Holdings, LLC.

Klynveld had been engaged to audit the September 30, 2010 financial statements of NASB but things managed to get confrontational right off the bat as KPMG raised questions about the Company’s valuation methodology of Central Platte in its first quarter review.


This must have made NASB a little uncomfortable since KPMG’s methods might not paint as rosy as a picture and could have resulted in a restatement. Per the 8-K, “KPMG also informed the Company that if the investment was determined to be impaired, evidence existed which indicated that such impairment may have occurred in a prior period.”

Obviously the mere idea of a restatement was completely unacceptable for NASB but when KPMG requested that the Company engagement a third party appraisal, they really freaked. Either the bank didn’t want to pay for said third party’s services, or they were worried that the appraisal would show that Central Platte wasn’t worth squat.

More from the 8-K filing:

At KPMG’s request, management estimated the fair value of the investment in Central Platte. After reviewing management’s estimate of fair value, KPMG requested the Company obtain an independent third party appraisal of the fair value of the investment. KPMG did not complete their review of the fair value of the investment in Central Platte prior to their dismissal.

While the Company continues to evaluate whether it should change its accounting method in measuring impairment of the investment in preparing the financial statements for the quarter ended December 31, 2009, the Company disagrees with KPMG that its method of evaluating potential impairment of the investment in such period or in any prior
periods was in error.

For those of you unfamiliar with SEC filing lingo, the statement “the Company continues to evaluate whether it should change its accounting method,” actually means “We’re not changing shit.” Luckily, NASB knew that it can rely on their old auditors to give the thumbs up to their preferred method so they ran back (weeping and arms flailing no doubt) to BKD.

Maybe KPMG’s Kansas City office needed business but something tells us they’re better off.

Real estate dispute leads NASB Financial to switch auditors [KC Star]
8-K [SEC.gov]

Decoding the Latest KPMG HR Talking Points

FINS published an interview with Bruce Pfau, KPMG’s vice chair of Human Resources, on Monday, with the topics ranging from, “getting a foot in the door, poaching amongst the Big Four, the firm’s push into environmental advice and its goal to capture the best and brightest on U.S. college campuses.”

You can read the entire interview here, but good luck understanding the HR-code served by Pfau. Calm your fears, you don’t need a Ouija board in order to understand the current state of the KPMG Kamp. Below is my best attempt to translate Bruce.

Kyle Stock: Can you provide a geneent hiring?
Bruce Pfau: Each year we hire a couple of thousand people from [college] campuses into our audit, tax and advisory practices. In addition to full-time people, we’re also hiring interns.

We’re also very focused on making sure that we’re keeping an eye on creating a diverse workforce compliment.

DWB – Yes, we’re still hiring. But hell, we have to. We’ve committed to interns and fulltime hires going forward multiple years. Remember when the bottom fell out in late 2008? Yeah, we already had 2010 kids signed up. Also, non-English speaking professionals help out with our diversity statistics; even H.R. has numbers targets. Have fun in that client meeting!

KS: It seems that some of these concentrations would favor certain geographies, are there any specific parts of the country where the firm is growing?
BP: You can pretty much gather from some of the areas of focus that there will be some geographic concentration. We have a gigantic financial footprint in New York, but that doesn’t mean we’re not hiring financial folks on the West coast as well. And we’re obviously beefing up in developing countries — in China, Southeast Asia, India.

DWB – Yes, I used the word “gigantic” to officially describe our position. PS – if you’re not in the gigantic New York market or the west coast, you’re dead weight. Expect cuts or consolidations in offices. Conversely, thank you to our folks in the Big Apple and the Silicon Valley for keeping our pants on these past 18-24 months. Your free Phil hat is in the mail.

KS: KPMG also recently hired the United Nations’ chief climate change expert, Yvo De Boer. Can we expect the firm to offer more environmental advice?
BP: We’re looking to expand our footprint in that area, not only in the standpoint of the firm’s commitment to being a good corporate citizen environmentally and having our own green efforts, but also to try to utilize some of his capabilities, knowledge and relationships to expand our business and gain higher visibility in that space globally — areas like carbon evaluation and emissions trading.

DWB – We finally moved away from paper audits, didn’t we?

KS: You recently hired a new partner in charge of campus recruiting, Stacy Sturgeon. Is the firm taking any new directions there?
BP: I don’t expect to see any major changes in our approach there. We’ve spent the last several years taking campus recruiting to a new level. We’ve redoubled our relationships there and did a variety of things to make sure that our message is getting across to the best and brightest students.

DWB – Hell no, we ain’t changing a thing. There will always be a slew of helicopter parents shoving their over-achieving children into an accounting career. Our traps are set. Fish. In. Barrels.

KS: Do you engage in recruiting via social media and has it proved to be valuable?
BP: Yes. Obviously, [we use] the electronic job-boards and things of that nature. The Facebook-type forums we’re obviously participating in as well, though I cannot say it has transformed our hiring at that level. It’s more of an incremental difference. Our hiring at the more junior level really has a lot to do with sustained relationships with students. Huge percentages of the people that we bring in from campus have done an interview with us. That’s the best social interaction that we can have [with them].

We believe that we’re a great place to build a career.

DWB – we always have and always will scour the Monster.com’s of the world for tax and advisory talent. Audit is a lost cause. I don’t have a freakin’ clue about Facebook. My kids are on it. Our first year associates swear by it. Some of our managers think it’s suave to “friend” their staff. But just like everyone else in the universe, no here has figured out how to profit it from the networking site.

But newsflash – we interview kids on campus, not on Facebook. Most of them, that is. There’s a select group that have parents at important clients that we let into the KPMG Kamp for free. And do you like that last line about building a career? Yeah, I’m paid to say that.

KS: You mentioned culture, how is KPMG’s culture different from the other three of the Big Four?
BP: Our cultures are way more similar than they are different.

I strongly believe that we face the same challenges, we recruit the same kinds of individuals, we’re in the same business — there’s a lot that’s similar. Where we differ is in a few areas.

First, although all of the firms have a good record in this, I truly believe that our firm has a remarkable culture of corporate social responsibility and volunteerism. I think that that’s something that really is a little bit different at KPMG. I literally could go on and on about how our people have risen to the occasion in that area.

The second thing is the whole area of continuous learning and development. We want to differentiate ourselves as being a great place to build a career.

DWB – We’re all accountants; how different can we be? In terms of volunteerism, what other accounting firm stuffed bears instead of getting blitzed on light beers and chardonnay? That’s what I thought. Build a bear, build a career (I said it again!). Come on, this was a brilliant idea.

A brilliant idea that us partners are still paying for. $*%@.

What Are People Saying About Phil Mickelson’s 1st KPMG Masters Victory?

Phil Mickelson earned his third green jacket and Masters championship this weekend, his first major win since striking a sponsorship with KPMG’s hat department.

I took to the online streets of Twitter to see what people were saying about Phil’s win for the KPMG Kamp.

I’ll start off with the legal…

@seanmg: Everytime I looked at Phil Mickelson today I saw that KPMG hat and all I could think of was illegal tax shelters.


…the official…

@KPMG: Phil Mickelson wins his third career Masters title wearing his KPMG cap! http://www.pgatour.com/

@KPMGRecruitment: Congratulations to KPMG-sponsored Phil Mickelson – US Masters Golf Champion 2010!

@RandyWGilbert: Being both a lefty and a KPMG’er it was great to see Phil slip on yet another Green Jacket! http://bit.ly/bx5Oq5

…to the sarcastic…
@chris_reynolds: I felt like the KPMG hat really put Phil over the top.

@synergytim: Does KPMG sponsor Phil Mickelson because of his initials?

…to the giddy excited…

@rychlewc: And Phil wins it! Go KPMG!

@CaseyCope: Oh Phil. You’re our finest investment ever. We’re proud of you, buddy! #KPMG

@Csolo_wvu_reds: Congrats to Phil Mickelson, the people’s champ, straight reppin KPMG all day…

…to the utterly confused.

@milktrader: What does KPMG on Phil’s hat stand for? A sports drink?

@bthogan80: @darrenrovell1 any idea what KPMG pays for phil’s hat?

@andrea_eagleman: Way to go, Phil. Side note – KPMG reallllly needs an updated logo.

What are your thoughts on Phil’s win for KPMG? Discuss.

KPMG – Masters of Thursday’s PR Powerhouses

Forget the fact that what’s-her-name can’t hit the links, let alone join the Old Man’s Club that is Augusta; this weekend is all about Tiger Woods and, if you’re from the KPMG Kamp, Phil Mickelson. Not a resident of the KPMG Kamp is Chris Rock:


Don’t get me wrong – I love Phil, and so should you. What’s not to love? Big goofy smile, overweight just enough to make the average golfer feels connected to the lovable pork chop of an athlete. And he’s left handed, so you just know the world is out to get Golf’s Favorite Underdog. Golf and chainsaws, a lefty’s biggest fears.

But I digress. Back to Uncle Peat.

Phil currently sits tied atop the leader board at five under par, tied with three others. But who cares about those knicker-wearing chumps?! UNCLE PEAT IS IN FIRST PLACE!!!

Us regular peons can only imagine the jubilation amongst KPMG leadership in attendance this weekend. T-Fly and The New Guy back slapping each other and clients-to-be. But are they nervous? After all, Phil is much like KPMG – always the hopeful underdog, their supporters praying that their fearless leaders don’t slice it and end up in the rough (or court). There are rough patches in every round, but coming out ahead of the game is key, is it not?

Hopefully the Philster can keep himself and his catchy hat on top of the leader board going into the weekend. For the tax crew out there, you can follow your favorite Tiger Slayer’s weekend rounds live on Masters.com. Hopefully streaming video isn’t blocked by the Kamp Kounselors.

Compensation Watch ’10: KPMG Back to Raises and Bonuses

KPMG’s newly announced Chairman John Veihmeyer knows that you’ve been anxious, so in a message to Klynveldians, Johnny gets right to the point, “I want to take a moment to address a question that I know is on the mind of every KPMG employee: Will there be raises and bonuses this year? The short answer to this question is ‘Yes.'”

For the “vast majority of our people” and bonuses will be available, “our goal is to enhance our variable compensation pool from last year—meaning higher bonuses than last year.”

How’s that for a Friday morning message?

As we reach the midpoint of FY 2010, I want to take a moment to address a question that I know is on the mind of every KPMG employee: Will there be raises and bonuses this year?

The short answer to this question is “Yes.”

As we communicated during this year’s town hall meetings, the business environment is showing measurable signs of improvement. In fact, I am pleased to report that thanks to your efforts the firm is slightly ahead of plan. So by year-end, we fully expect that the pickup in market and business conditions will drive compensation increases for the vast majority of our people. Also, assuming we meet our plan, as we are on track to do, our goal is to enhance our variable compensation pool from last year—meaning higher bonuses than last year for EP performers as well as bonuses for deserving SP performers. Assuring that we recognize and reward our best performers is an integral element of our compensation philosophy and a critical ingredient of the high-performance culture we intend to maintain.

We are optimistic. But along with this optimism, we must maintain realistic expectations. Keep in mind that our FY10 plan is more challenging in the second half, and reliant on significantly improved performance in the spring and summer.

What does this mean? It means that now more than ever, we must come together as a team to do our best work and make 2010 a successful year—one that brings the improved business results that enable us to restore the financial rewards that we all desire. If you’re in Audit, Tax, or Advisory, it means driving business and providing the highest-quality service to clients. If you’re in a Client Service Support role, it means providing our professionals and teams with effective tools, resources, and information they need to win business and deliver excellent service to clients. And all of us need to continue our Spend Smart efforts and do our parts to drive efficiencies in the way we operate.

Whatever the remainder of 2010 brings, you can be sure that KPMG remains committed to its philosophy of providing our people with an attractive and competitive total compensation package that differentiates exceptional performers with superior rewards. And, we remain fully committed to being an Employer of Choice and a great place to build your career.

Thanks for all your contributions to our firm’s success.

KPMG Gets a Less Than Desirable Photo Op

This month students around the world have been celebrating spring break. That usually means one thing – young people get cop-slugging drunk and maybe, if you’re really unlucky ruin your chances of employment.


The Daily Mail reports that 5,000 British students descended upon the seaside Spanish town of Salou, getting over-served, running around in their birthday suits and pissing off the townies. The gem above is one of several photos that accompanies the article.

The tipster that sent us the link wondered if Phil Mickelson would approve of this. Other than the obvious, “OH HELL NO!” We think Mick’s response would be something to the effect of, “Those little bastards are lucky they aren’t wearing my hat otherwise I’d rearrange their face with my LW.” But forget Lefty for two; now that Tim Flynn is focusing his efforts on being the international chair of KPMG this is the type of crap that causes T Fly to grit his teeth into dust.

“Saloufest” is described as a “sporting event” so maybe these shirts/jerseys are KPMG giveaways and no one is in danger of poorly representing the House of Klynveld. That being said, this probably isn’t what TF and Co. had in mind when they slapped the four squares on a shirt. Btw, if you’ve happen to have some extras, get in touch.

(UPDATE) John Veihmeyer to Succeed Tim Flynn as Chairman of KPMG’s U.S. Firm

UPDATE/Correction, Wednesday 3.24.10 – Previously, headline stated that John Veihmeyer was succeeding Tim Flynn as Chairman and CEO. John V. has actually been the U.S. CEO since 2008. Sorry JV, for not giving you credit there.

The suspense is over. Johnnie V. has been serving as th the U.S. Firm since 2005 and he has the full confidence of TF, “There is no finer individual to lead the U.S. firm and build upon the progress that has been made over the last five years…John is equally passionate that KPMG continues to be a great place for our people to build their careers, in a culture that embraces diversity.”

JV will be succeeded by Henry Keizer in the Deputy Chairman role. Hank will also be the U.S. firm’s Chief Operating Officer. Timmay is also excited for Keizer Soze’s promotion, “His leadership and professionalism will be vital to ensuring the firm meets the challenges and capitalizes on the tremendous opportunities ahead…he has championed the use of technology and off shoring to enhance our operational effectiveness and efficiency in an increasingly competitive marketplace.”

Tim will be focusing on his roles as the Chairman and Senior Partner of Klynveld International, dashing our wishes for him to be the next Secretary of the Treasury. He was “strongly endorsed” by the Global Board to get down to business in this “unprecedented global economic and regulatory environment.” You can probably plan on more Davos interviews next year, chatting up royalty, caddying, etc.

I am extremely pleased to announce that the partners have ratified the election of John Veihmeyer as Chairman and CEO, and Henry Keizer as Deputy Chairman and COO, of the U.S. firm. John and Henry will assume their new responsibilities on June 10, 2010, when my term ends as U.S. Chairman. John and Henry bring strategic insight, deep leadership skills and extensive experience in serving clients to their new roles.

While it was a difficult decision for me not to continue in my role as Chairman of the U.S. firm, it has become increasingly clear to me that my additional role of Chairman and Senior Partner of KPMG International requires a full-time commitment. Last week, the Global Board strongly endorsed that I serve full time as Global Chairman in this unprecedented global economic and regulatory environment and period of tremendous opportunity for our member firms and people.

Having the privilege to work side by side with John during our five-year term as Chairman and Deputy Chairman, I have seen first-hand his professionalism, leadership and commitment to KPMG, its people and clients. There is no finer individual to lead the U.S. firm and build upon the progress that has been made over the last five years.

In addition, Henry will bring a tremendous amount of operating experience and energy to the Deputy Chairman and COO role. His leadership and professionalism will be vital to ensuring the firm meets the challenges and capitalizes on the tremendous opportunities ahead.

John has served as Deputy Chairman of KPMG since 2005, and he brings a unique combination of skills and experience, across all aspects of our strategic priorities, to the role of chairman. John is equally passionate that KPMG continues to be a great place for our people to build their careers, in a culture that embraces diversity.

Henry comes to his new role after serving as U.S. Vice Chair, Audit since 2005 and Global Head of Audit since 2006. In these roles, he has championed the use of technology and off shoring to enhance our operational effectiveness and efficiency in an increasingly competitive marketplace.

John and Henry’s professional depth, integrity and commitment to our clients, partners and the people of KPMG will serve the U.S. firm well as we move forward. Please join me in congratulating John and Henry and welcoming them to their new roles.

In closing, there was never a day that I was not grateful and humbled by the opportunity to lead and work with the truly exceptional people of KPMG. I have been awed by your talent, proud of your accomplishments and appreciative of your dedication. It truly has been an honor to serve as Chairman of the U.S. firm for the last five years.

Thank you for all that you do every day to support our firm and deliver on our promise of professionalism to each other, our clients and the capital markets we serve.

All the best,

Tim

KPMG’s Layoffs in Advisory May Have Made Room for Some Auditors

Happy Hangover Thursday, folks. Hopefully the green food coloring washed off easily this morning.

I was out networking with my Irish brothers last night in midtown New York, quite a few blocks north of my normal after-work locale. Second Avenue bars full of cold beer and burned out white collars, St. Patty’s Day was a welcomed Wednesday relief for those in busy season. The day was over, the night was turning late and, for once, shop talk was put on the back burner. That is, until I heard the phrase “Uncle Peat” used as the object of affection bitterness for a toast.

Obviously, I couldn’t resist.


DWB: “Are you guys auditors?”

Auditor 1: “Yeah, over at KPMG. Hopefully not for long, though.”

DWB: “Nice, nice. Moving on to better things?”

Auditor 2: “Hopefully.”

Auditor 1: “Not soon enough.”

A round of drinks later (toast to Uncle Peat not included) and these Irish-for-the-day gentlemen filled me in about an email circulating around KPMG’s NYC audit practice regarding a temporary rotation into the Transaction Services (TS) practice. TS specializes in mergers & acquisitions work and was — most likely — hit steeply by the rounds of the falling guillotine back in 2008 and 2009.

How does a practice that was hemorrhaging money and resources a year ago now have business blowing through the door at such a fierce rate? If you read anything beyond the usual busy season distractions, it’d come as no surprise to you that the markets are slowly picking up. But service firms typically lag in response, both on the positive (Woo-hoo, new business!) and negative (Sorry, this isn’t about you – this is about the numbers) sides of the equation. Nonetheless, Uncle Peat’s auditors should be leaping at this opportunity. A rotation out of audit can be refreshing, even in the quieter months of summer.

Did KPMG’s advisory shake up and realignment pay off? Is the firm’s leadership blowing smoke to perk up the down-trodden auditors currently drowning in busy season? Was a picture of a giant carrot on a string used in the email? If you received this email, I’d love to read the text. Last night’s informants promised to send it over, but they probably called in with emergency doctor “appointments” this morning.

KPMG Reinstating “Standing Ovation” Bonus Awards

Back in November 2008, KPMG suspended the highest level of its Encore bonus award, the Standing Ovation to “manage costs.” Since there is no shortage of exceptionalness at Radio City, the $500 awards were adding up so word came down that it was ixnay the tandingsay vationsoay.

The firm did keep its “Bravo” award that was good for $200 and replaced the five-hundo bonus with a $25 award and “thanks e-cards” that were way better than anything from Hallmark simply because Tim Flynn probably included a personalized message.

And you, simply, cannot put a dollar figure on that.


The most devastating part of the Standing O kibosh was that the trophies — which could easily qualify as a “blunt object” at a crime scene — were no longer handed out. These, understandably, are most coveted of all KPMG tchotchkes.

Well now, according to accountants familiar with the matter, the firm has reinstated the Standing Ovation for reasons that we can only speculate. It will be reserved for those Klynveldians that “go above and beyond” the call of their duties. Again, we can only speculate as to what this actually entails. Considering the fact that the hours you’ve been putting in for the last month or so have been expected, it may just mean that you have to try a little bit harder.

The reintroduction is being received tepidly, as one source told us:

Kinda meaningless to me. They don’t hand them out. Except for managers that want to get laid by younger staff.

Seconded by another source:

Just because they bring them back, doesn’t mean any partners plan on approving them. – “Oh, I nominated you for a standing ovation, but it didn’t get approved! It’s the thought that counts though, amirite?”

Another source saw it as too little, too late:

“Do they really think $500 is going to stop a mass exodus of [people] from leaving? Perhaps they should have thought about that when they didn’t give raises.”

Despite the vague qualifications for the award, it’s good to see TPTB reinstating the bonus for the sake of morale/bribery/empty hope. Now go get yourself one!

Jefferies Follows Select Comfort’s Lead, Dumps KPMG for Deloitte

So this makes two SEC clients lost for KPMG in as many days. Again, Jefferies had no disagreements with KPMG yada yada yada. Jefferies didn’t even receive a GCO like Sleep Number. However, KPMG did include this language for this year’s (i.e. December 31, 2009) audit opinion:

“As discussed in Note 1 to the consolidated financial statements, in 2009 the Company retrospectively changed its method of accounting for noncontrolling interests in subsidiaries and earnings per share due to the adoption of new accounting requirements issued by the FASB.”


BFD, right? Could Jefferies really be so bent of shape over that to make the auditor switcheroo?

The other point is — and maybe we’re making a mountain out of a molehill here — this is the second example of a non-standard auditor opinion from the House of Klynveld followed by clients kicking them to the curb for the clean scalped, mustachioed comfort of Deloitte.

One thing is for sure and that is that Deloitte is clearly on the offensive here after losing so many SEC clients last year. Still, we’re curious about a few things: 1) Is Big D going after KPMG clients specifically? 2) Is there a secret weapon being employed to woo these clients (e.g. Barry does a dead-ringer Dr. Phil impression during the presentation)? 3) Are KPMG clients upset about Tim Flynn stepping down as chairman? OR are they upset that the Radio Station is still camping out in Iran?

If you’ve got concrete knowledge, crackpot theories or just want to take a shot in the dark (since most of you are probably drinking by now) on this new and emerging (?) trend, fire away.

8-K [Jefferies]
10-K [Jefferies]
Jefferies Announces the Engagement of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm [Business Wire]

UANI Goes After KPMG for Iran Ties

[caption id="attachment_6035" align="alignright" width="260" caption="There\'s no connection. See? Iran is way over here. "][/caption]

It’s hard enough to be a Big 4 firm these days that you don’t need this. New York-based United Against Nuclear Iran (UANI) is a little upset with any and all companies that are doing business in Iran and just because you claim that you are a protector of the capital markets, that doesn’t earn you a free pass.

The Financial Times reports that UANI’s latest target is none other than the House of Klynveld and the lobby group sent a letter to Tim Flynn stating their displeasure with KPMG’s ties to their independent member firm in Iran, Bayat Rayan.


Flynn, who is stepping down as the Chairman of KPMG this summer, probably isn’t too psyched to have the firm lumped into the cross-hairs of UANI, who has relentlessly pressured companies to stop doing business in Iran.

The FT reported that the UANI set its sights on KPMG “after [a] week-long campaign against Ingersoll Rand ended with the Dublin-based diversified industrial company announcing on March 8 it was instructing its subsidiaries not to sell products ultimately destined for Iran.”

We contacted KPMG for comment but have not yet heard back regarding a response from the firm.

According to the letter, UANI will take “any and all action we deem necessary to hold KPMG accountable for its inappropriate business relationships with Iran,” which sounds pretty serious. Although we’re not sure what ‘any and all action’ will entail but for T Fly’s sake, we suggest he gets this resolved sooner rather than later. If he doesn’t, he can expect calls from Bill O’Reilly and his mug next to Ahmadinejad’s on the Factor.

KPMG is latest target for activists seeking to cut corporate ties to Iran [FT]

Imprisoned Ex-KPMG Partner Sentenced to 57 Months for Defrauding IRS

Today in insult to injury news, Bob Pfaff, who pleaded guilty back in the fall for conspiracy to defraud the IRS, was sentenced today to 57 months for his tax untruthiness. He was also ordered to pay the IRS over $1 million in restitution. The bright side for Pfaff is that Judge Richard Berman ordered that only three months of this new sentence would be served consecutively. After 97 months, an additional three will be nothing. That’s just half of a baseball season.


Pfaff is already serving a 97 month sentence for his role in the KPMG ‘tax shelter mill’ that originally involved 17 KPMG executives. Charges were dropped against all but four of the accused after it was determined that prosecutors had pressured the Firm to not pay their legal bills.

Seemingly this marks the end of this particular KPMG/tax shelter case. Another recent case involves Daryl Haynor, a partner in the Tysons Corner office. Mr Haynor was indicted back in the fall for allegedly conspiring to defraud the IRS to the tune of $240 million.

Ex-KPMG Partner Pfaff Gets 57 Months for Tax Crime [Bloomberg BusinessWeek]

KPMG Knows You’re Feeling Like a Fatty

Yes. You. Spending day after day at that desk, consuming a steady diet of red meat, bagels loaded with cream cheese that is going straight to your [insert problem area] and, of course, caffeine. Sweet, sweet caffeine.

It all adds up to a bunch of tubby Klynveldians, and tubby = not happy. This is not lost on the leadership at KPMG. They want you to know that they want to help you lose that paunch ASAP and they are prepared to offer you a human being to assist you.

According to the Centers for Disease Control and Prevention, more than one-third of American adults are overweight, and many people are actively seeking a solution for weight loss. Losing weight isn’t just about looking better in the mirror—being overweight can contribute to a range of health issues, including heart disease, diabetes, hypertension, and even certain types of cancers.

Lots of us have tried to lose weight, but find ourselves giving up because it can be tough to do. But what if you had your own weight-loss coach, someone who could provide personalized guidance about nutrition and exercise, and provide strategies geared toward your specific situation? What if you could call that coach as many times as you wanted over a six-month period, when you had a question or needed some encouragement?

You can have just that, at no cost to you, thanks to KPMG and LifeWorks through the iCanChange program. iCanChange gives you access to a dedicated, experienced and credentialed health coach who will help you identify goals, strengths, challenges, and strategies for managing your weight.

You will be able to receive four scheduled calls from your coach, and you can call him/her as many times as you would like over a six-month period. Your coach will help you track your progress and set realistic goals to lead you along the road toward losing weight.

So, just who exactly is KPMG recruiting to help these numbers nerds get back in fighting shape? Richard Simmons? Chuck Liddel? Phil Mickelson?

Assuming this doesn’t have to wait until after busy season you best get crackin’ in case Radio City announces its own Canadian Tuxedo reprieve. Fat guy in a little denim coat is not a good look.

Alexandre Bilodeau Is KPMG Canada’s Phil Mickelson

When our Olympic Fever started last weekend, we had no idea what would happen. Sure there would be torches, majesty and endless montages but if you had told us that we would discover that KPMG has got dibs on a marketing dynamo like Alexandre Bilodeau, we would have said NFW.

AB was the first gold medalist for Canada in the Vancouver games. He won the Freestyle Men Ski competition on Sunday and now he’s got people just throwing money at him.


However, Al has had KPMG as a sponsor since 2006 (longer than Phil!) when he competed in Turin, Italy (the old man is a tax partner). All these new companies that want a piece of Golden Boy are going to have to get behind T Fly and Co. because Al strikes as a loyal guy.

KPMG Canada nailed this one. This dude is young, handsome, and doesn’t have to worry about a slimeball rival returning to steal the thunder. Now if he could only win the U.S. Open…

KPMG Boston Is Sprucing Up the New Headquarters, Sans Sign

This morning we shared with you the news about Deloitte’s new nightlight in San Jose. Back on the right coast, KPMG Beantown is getting a little redecorating done themselves although it sounds a little more substantive than a sign that can’t send morse code to San Fran in case someone needs an extra intern.

KPMG bestowed Jones Lang LaSalle with the honor of designing the interior of the new digs at Two Financial Center and it sounds like all Klynveldians will be infinitely more productive at the new HQ. 96,000 square feet of pure auditing, tax, and advisory bliss:

The interior will enhance workflow efficiency and accommodate KPMG’s growth requirements, which include capacity for 692 employees. Highlights of the build out, valued at $5.8 million, include: a central reception area on floors one and two, a large conference center with full media capabilities, an employee café, dedicated Human Resources suite and open office areas.

By the sounds of it they’re implementing some sort of Feng Shui strategy that will result in robotic efficiency.

We’re thinking that less than $1 mil a floor sounds like a decent deal but no sign? How the hell is that worth it? It probably wasn’t up to the gang at JLL but they could have at least looked into it. If the British invade again, a warning from the four blue squares would go a long ways towards KPMG’s national security cred.

Who Will Be the Next Chairman of KPMG?

Yesterday we told you the sad news that Tim Flynn will not be serving another term as Chairman of KPMG.

After taking the time to compose ourselves and realized that life will somehow go on, we had questions. Figuring you had some of your own, we’ll throw a few out there for some discussion. These will range from the obvious (i.e. headline) to the inane but they are all of equal importance:

• Why Tim? Why?

• Is the Davos trip the last hurrah and if so, what is doing to celebrate/reflect/mourn?

• If he’s not taking Tim Geithner’s job then what? Will T Fly defect to one of the other Big 4? Launch a blog? Ponzi scheme?

• How does Phil Mickelson feel about this and does this mean he will keep TF on the bag or is this an honor reserved only for the Chairman?

We may not have covered everything here so chime in with your questions or simply respond to those we’ve put out to the group. And please, if he happens to change his mind, notify us immediately.

Tim Flynn Will Not Serve Another Term as Chairman of KPMG

Tim Geithner better be paying attention. This could be your successor.

As you may know, my five-year term as U.S. Chairman ends in June of this year. Late last week, I informed the Board and subsequently announced to the partners, that I have decided not to serve an additional three-year term as U.S. Chairman after my initial term ends this June, as permitted by the firm’s governance.

This decision was made after much thought and personal reflection. KPMG’s partnership agreement has a well-defined and time-tested set of protocols in place whereby the Board of Directors is expressly responsible for managing the succession process for Chairman. Over the next 60 days, the Board will execute that process, the planning for which began late last summer.


Our firm has an outstanding group of partners and an effective, seasoned leadership team that is focused on our partners and employees, our clients, and the marketplace.

You have my personal commitment that I and the entire leadership team will remain focused on these key priorities throughout the remainder of my Chairmanship.

Thanks for all you do every day for KPMG.

Chairman_Succession

Tim Flynn at Davos: We’re Moving Toward the Green Light of Trust

After wondering aloud if the Big 4 was just going to spend the entire week at Davos chasing blondes and eating chocolate some of the more easily rankled of you pointed out that Tim Flynn was all business and had already given an interview with CNN. Plus, since we saw Dennis Nally this morning it would seem like there is work being done. God forbid the guys do anything fun while they’re over there.

Anyhoo, we finally got around to watching TF’s chat with Richard Quest at Davos and we thought he did a pretty bang-up job. One thing we would have done different — if we were T Fly that is — was ask DQ why we were excluded from the last CNN interview. “What about it CNN? I’m not good enough for APEC piece but you’re happy to include me on this little campout?” Or something to that effect. We imagine that he was asked to keep it cordial.


Back to business: The one thing that threw us off was the red light/green light of trust thing. Trust doesn’t really strike us a color, least of all green. Think about it: Green = money = Goldman Sachs. Plus, has T Fly seen those tea party people? They don’t trust anyone. See why we’re confused? If you get it, please explain, but watch first.

KPMG Haiti Relief Effort Details

We finally nailed down some specifics from a trusted source on KPMG’s efforts to assist with Haiti relief.

The Americas Region (U.S., Canada, Central and South America, and Israel) have contributed $300,000 to the efforts so far, with a total goal of $500,000. These are the combined contributions of the both the firm and its employees. The International firm has pledged $500,000.

All contributions are going to UNICEF and Save the Children.

If you’ve got updates on your firm’s efforts or if you would like to notify us of what your firm is doing to assist the efforts in Haiti, email us at tips@goingconcern.com

Earlier:
We Knew Accounting Firms Were Helping Haiti

The Latest Challenge for KPMG Employees

Team, KPMG has submitted a challenge to its employees in the Florida/Carolinas/Puerto Rico neck of the woods, and we felt compelled to include the rest of you, just for the sake of expanding the brain pool:

Name the Business Unit Contest
January 22, 2010
How do you describe the most scenic business unit in the nation? From the mountains and outer banks of Carolina to the Everglades and beaches of Florida and the rain forests and blue waters of Puerto Rico, we have it all!
As the former FBU and CBU business units come together, we thought it would be fun to invite each of you to participate in a contest to name the new BU. In addition to bragging rights, a prize will be awarded to the person who submits the winning name.
Remember…be creative and have fun!
Send your ideas to US-FBU CSS COMM Leadership Mailbox by Friday, January 29, 2010. A prestigious selection committee will make the final selection and the winner will be announced by Friday, February 5, 2010.

Lost of questions here: 1) It’s busy season; between reading this fine publicaion, trying to get laid, and wallowing in disappointment, who has time to come up with name for the FlorinasRico business unit? 2) Who’s on the prestigious selection committee and how did they get this cushy gig? 3) Does Phil Mickelson figure into this prize in any way, shape or form? 4) If yes, will Tim Flynn be caddying for you, Phil or both?
You’ve only got until Friday to submit ideas, so we suggest you get on this ASAP.

The Fortune 100 Best Companies to Work For: KPMG #88

Last, but definitely not least, on the F100BCTWR is the House of Klynveld. We figure that if you judged the HoK based solely on the fact that it sponsors a golfer who can manage to keeps his pants on for five minutes, they dominate this list. Unfortch, Fortune takes additional variables into account out of respect for the process.

KPMG – Previously ranked #56. It’s great because, “[The] firm introduced a sabbatical program allowing employees to take leaves of four to 12 weeks at 20% of pay. Some 450 employees immediately signed up for it. Employees average 25 paid days off.” Thoughts?


Other interesting stats per the snapshot:
New Jobs (1 year): -1,581
% Job Growth (1 year): -7%
% Voluntary Turnover: 12%
No. of Job Openings at 1/13/2010: 2,700
Most common salaried job: Senior Associate with average salary of $78,100

So the numbers aren’t so hot compared to others. Not to worry though! TF is out there rallying the troops even jumping across the Hudson every now and again just to check on everybody. What more could you ask for?

Earlier:
Ernst & Young #44
Plante & Moran #66
Deloitte #70
PwC #71

KPMG Advisory Has Another Potentially Awkward Meeting, Sans Dog

Thumbnail image for Thumbnail image for Thumbnail image for PomeranianSP1324.jpgIf you’ve been hanging around these parts long, you’ll remember back in the fall when Klynveldians were sitting down for their compensation discussions which gave birth to one of our favorite mascots. All professionals in the Southeast region of the advisory practice witnessed an awkward moment when the then partner-in-charge of advisory phoned in, along with his dog, to break the news to the troops that they weren’t getting squat for raises.
Well today, there’s another call down in the Southeast — the “SE Advisory Market Development Staff Update Call” to be precise — and apparently there’s more bad news. It seems that the SE advisory practice (the largest in the firm, according to one source) is a bit behind on its revenue targets for the first three months of the new fiscal year and January isn’t shaping up so well either. The actual revenues are trailing the planned targets by approximately 15%, according to slides from the presentation obtained by GC.


Sources have indicated that while there is significant pipeline revenues, as of January 11th, only ten percent have either verbally committed to an engagement or are currently being negotiated. More than one-third of the pipeline is classified as being in the “identification” stage which is largest group. Now perhaps that is a normal ratio but another slide indicated that the number of client wins are on pace to be down considerably (~50%) for the month of January as compared to the prior three months.
One of our sources indicated to us that a major problem is that “identification” of a potential client was enough to have it included in the pipeline. In other words, if your Pomeranian sniffs a Boston Terrier’s ass at the dog run and you talk shop with the owner of said Boston T, that person is more or less in the pipeline. The conversion of the BT apparently is not crucial and even if the Boston Terrier is converted to realized revenue, it was a far smaller percentage than initially estimated.
The problem, as it appears to us, is that business in the advisory practice in the Southeast could be drying up (or maybe just getting more competitive) and that conversion of potential business is slipping. It’s far too early in the fiscal year to speculate — but by all means go right ahead — about what this all will mean and if business picks up, then it will be moot. But after the shake-ups that went down in that part of the country, the pressure is most certainly on.
If you were on the call today or have more insight, discuss and get in touch.

Tim Flynn Speaking at the KPMG Town Hall Meeting Circa Now

Thumbnail image for TimMFFlynn.jpgOur understanding is that T Fly is rallying the New York troops this morning so if he says anything worth noting (e.g. “I’m leaving the firm to become the next Treasury Secretary“), be sure to get in touch with us or discuss below.
We’re not sure if he’ll be giving pep talks to other offices so if you’re in not in New York and you’ve got TF on the docket, keep us updated.

Is Tim Flynn Being Vetted as the Next Secretary of the Treasury?

Welcome back, servants of the capital markets. We’ll dispense with anything substantive this morning in order to help you combat the depression. We’ll start off by presenting you with the following:
obama-kpmg.jpg
As you can see, this is the POTUS on vacation working in Hawaii with the entourage in tow. One member of said entourage just happens to be donning a KPMG cap and since not just anyone can get their hands on these coveted lids — and since the gentleman’s face is mostly obscured — we’re curious about a few things: 1) Is Tim Flynn leaving the Radio Station for a cabinet position and if so, which one? 2) Was Phil Mickelson joining the Prez for some time on the links and had a overwhelming urge to represent? 3) If this is just some Obama yes-man, did he receive the cap from a Klynveldian representative and is this a bold move to get KPMG representation in the President’s inner circle?
If you’ve got thoughts, theories, or wild-ass guesses, dispense them in the comments and again, welcome back.

KPMG Rolls the Dice, Will be the Next Auditor of Overstock.com

Thumbnail image for 200px-KPMG.svg.pngBut you already knew that was going to be the case. Back when we asked you to vote on which firm would be the next firm fired engaged by Overstock, over 42% of you said it would be KPMG.

This news comes despite reservations expressed by at least one reader who, at the time, had this commenlockquote>I for one think it is sad that such a high percentage of survey responders think KPMG will pick up OSTK. I hope from a public opinion and liability standpoint that KPMG will resist the urge to add yet another high risk client to its listing and cause further damage its reputation.

Sorry, dear reader but apparently the high profile cat fight between the company and Grant Thornton wasn’t enough to scare KPMG off. Not even the very public revelation of Patsy’s creepy-ass stalking of Overstock critics in the financial media and blogosphere caused the KPMG partners in SLC to turn this client down.

Oh, and not to mention a management team who thought that filing unreviewed 10-Q was the best course of action. But as white-collar crime expert (and self-proclaimed crook) Sam Antar told us:

KPMG is taking a client with no management integrity and is well advised to study SAS No. 99 about “Consideration of Fraud in a Financial Statement Audit” regarding the unethical “tone at the top” set by Overstock.com’s unprincipled management team. Every single initial financial report for every reporting period issued by Overstock.com has failed to comply with GAAP and other SEC disclosure rules since the company’s inception. Overstock.com has restated its financial reports two times in the last three years and now is trying to avoid a third restatement of financial reports resulting from its improper use of “cookie jar” reserves to inflate its financial performance from Q4 2008 to Q3 2009.

In case you’re not convinced of management’s shadiness, Sam also pointed out that they intended to wait for the current SEC inquiry to be resolved prior to choosing a new auditor:

Patrick Byrne and Jonathan Johnson went back on their promise that they would not shop for an audit opinion. Both Byrne and Johnson previously told investors that Overstock.com would wait until after the SEC Division of Corporation Finance completed its review of the company’s financial disclosures.

We looked at the transcript of the conference call and here’s what we found (a link to the entire transcript is below):

Willis TaylorGagnon Securities – Analyst

Since you’ve dismissed your auditor for a very specific accounting choice, when you go to select a new auditor, how do you prevent yourself from being accused of opinion shopping?

Jonathan JohnsonOverstock.com – President
That’s a great question, Louis, and that’s part of the reason that we’ve decided not to select a new auditor until this — until we resolve this issue with the SEC. We do not want to be accused of opinion shopping. We’d like the SEC to help us figure out — we’d like them to say we’ve done it the right way or we’ve done it the wrong way. Once they say one of those two, we don’t need to opinion shop.

Patrick ByrneOverstock.com – Chairman and CEO
But, so, I would even say to the point that when people have contacted us, we have discouraged any communication on the grounds that we got — for just that reason — well, I have the — no matter who we talk to now, then whoever we ultimately pick, people are going to say, well, you did this because you opinion shop.
So we’re really not having discussions with anybody. It’s nice to get phone calls, but we’re not talking to anybody until we get through this just to prevent — just as a prophylactic measure.

From the sounds of it, Overstock was beating off firms with a stick, so the pressure must have gotten to company’s audit committee to pick a new firm prior to the SEC wrapping up its little inquiry. So can we assume that since the SEC hasn’t told them yay or nay on their accounting, they ARE opinion shopping?

And so the winner (read: next to be dismissed) is KPMG, who not only has to throw together an audit for 2009, they have to re-issue 10-Qs for the last three quarters. Who in SLC is giving up sleep for the next four months?

Here is the Overstock press release (we emphasized some good parts) which is not shy about slamming Grant Thornton or that the SEC isn’t finished with its inquiry:

Overstock.com, Inc. (Nasdaq: OSTK) today announced that its Audit Committee engaged KPMG as the company’s independent registered public accounting firm of record for the fiscal year ending December 31, 2009. KPMG will conduct an integrated audit of the company’s 2009 financial statements, including review of the company’s quarterly information for the periods ending March 31, 2009, June 30, 2009 and September 30, 2009.

It is nice to be back with a Big Four accounting firm,” said Jonathan Johnson, President of Overstock.com. “We are pleased to have the resources and professionalism that KPMG brings as our auditors. We will work closely with them to timely file our 2009 Form 10-K. In the meantime, we remain in discussions with the SEC to answer the staff’s questions on the accounting matters that lead to our filing an unreviewed Form 10-Q for Q3.”

Overstock.com’s Audit Committee dismissed Grant Thornton, its previous auditors, in November when Grant Thornton advised the company that they had revised their position on how the company should have recorded a $785,000 asset in 2008, and, that as a result of this revised accounting position, Grant Thornton would be unable to complete their review of the company’s Q3 2009 financial statements unless the company amended its previous 2009 quarterly filings and restated our 2008 financial results.

We wanted to get KPMG’s thoughts on this but our emails have gone unreturned at this time. If you’re in the know, definitely get in touch with us about anything related to the latest twist to this story.

OSTK_Transcript.pdf

The Day After: KPMG and E&Y Holiday Party Report

Thumbnail image for HolidayParty.jpgWe were reminded that not only was E&Y FSO raging at a tourist trap last night, KPMG’s Financial Services practice was also tying one on at Jim Brady’s in the FiDi. This particular fiesta is the first major get-down we’ve heard of KPMG hosting so it’s good to know that there’s a little bit holiday cheer at every firm.
The Jim Brady’s party has been a popular event in the past and it’s a partner-free party so it’s a perfect opportunity for Klynveldians to blow off some steam, pants optional.
One source told us that it was well attended again this year despite being beer and wine only. We’re confident that was supplemented by flasks and other treats as another told us that the party was a “blast”. Safe to say that there was plenty of ass-grabbing as well as being an all-around bitch-about-KPMG fest.
Considering we haven’t heard a peep about E&Y’s get-down at TOTG, we can only assume that it was also epic.
Hopefully your cocktail flues have subsided to the point that you can tell us about the great night. If you remember anything, share the highlights or get in touch.

KPMG Global Revenue Drops 11.4%

Thumbnail image for Thumbnail image for Thumbnail image for PomeranianSP1324.jpgThe wait is over Klynveldians. Your firm’s revenue results are out and — not to put fine a point on it — they’re disappointing.

The press release has the typical spin that we’ve come to expect from the Big 4 bigiwigs as Tim Flynn focuses on the, ‘high growth markets’ and the opportunities that arise out of ‘a markedly changed regulatory environment’ (code for: “Democrats are in power”).

These “opportunities” are noted but the numbers speak for themselves. As Big Four Blog notes, “A drop in revenue was expected, the surprise was the magnitude of the drop, which was higher than other Big4 firms.”


From the press release:

KPMG, the global network of professional service firms providing Audit, Tax and Advisory services, today announced member firm combined revenues totaling US$20.11 billion for the fiscal year ending September 30, 2009, versus US$22.69 billion for the prior fiscal year, representing an 11.4 percent decline in U.S. dollars.

“While overall revenue results for the 2009 fiscal year reflected the global economic downturn, we were pleased that our continued investments in high growth markets resulted in continued growth in those country member firms,” said Timothy P. Flynn, Chairman of KPMG International.

The drop in revenues breaks down like this:

Audit – $9.95 billion in FY09 versus $10.69 billion in FY08, a 6.9% decline in U.S. dollars.

Advisory – Revenues of $6.07 billion in FY09, versus $7.27 billion in FY08, a 16.6% decline in U.S. dollars.

Tax – $4.09 billion in FY09 compared with $4.73 billion in FY08, a 13.4% decline in U.S. dollars.

The numbers certainly speak to the tough year that KPMG professionals have witnessed through many rounds of layoffs and several shake-ups that appear to be part of major restructuring in the U.S.
So now that the 2009 earnings season has come to a close, all the firms can focus on making 2010 less crappy. That should be breeze. We shall see. If you’ve got thoughts on the Radio Station’s year, or want to talk about how psyched you are for 2010, discuss in the comments.

KPMG reports 2009 revenues of US$20.1 billion [Press Release]

See also: KPMG 2009 Revenues of $20 B Drop 11%, Most Among Big Four Firms [The Big Four Blog]

Rumor Mill: Tim Flynn Paying a Visit to Montvale Today?

TimMFFlynn.jpgThat’s what we’re hearing! A source has informed us that TF is in the Garden State today “announcing a significant amount of outsourcing within the IT practice of the firm.”
Our source also indicated that TF — currently running second in the Accountant of the Decade vote — is:

…making general statements about the firm as a whole in regards to outsourcing. We were told that if we were getting outsourced there would be “advanced warning” or that they would try to move people around without letting them go, etc.

“Advanced warning” like a flare gun? Church bells? A lighthouse? The people need something more specific, TF.
It sounds both internal IT and advisory IT professionals are getting the pleasure of the pep talk so if you were there (or going this afternoon, rumor is there’s two meetings), send us your thoughts and discuss.

KPMG Prolongs the Agony by Releasing Just UK Revenue Results

Thumbnail image for 200px-KPMG.svg.pngThose of you that are dancing on one leg for KPMG’s global revenue results are going to have suffer with the anxiety for awhile longer. We know, we know. We’d love for the whole reporting season to limp into history but we have yet to hear Tim Flynn put his positive spin on this year’s revenue results.
Oh sure, we’re getting teased today by the UK firm and its European parent but this just prolongs the agony:

The UK firm saw revenues fall by 1.6%, to £1.63bn for the 30 September year end.
Profits fell 1.3% to £382m from £387m.
KPMG Europe’s revenues were €3.5bn, a 0.4% decrease on the previous year.
Its joint chairmen said the results were a “creditable performance”.
“We might have hoped for better economic conditions in our second year as a merged firm but rather than put our expansion plans on hold we have continued to pursue a whole range of strategic initiatives that will shape our performance over future years,” said John Griffith-Jones and Rolf Nonnenmacher.

Despite the disappointment Even with this creditable performance, Europe wasn’t without its problems, seeing the tax revenues drop 12%. No worries though, they promise to pull their weight 2010:

After suffering a 12% fall in tax revenues, Griffith-Jones said the service line was set to hold firm with the rest of the business next year.
“We resized the practice, and are fine where we are, [it’s performance] should be much more in line with the rest of the firm – it’s taken the pain.”

That’s the spirit! Lemons into lemonade. Now make with the band-aid ripoff method on these global results. Nobody’s expecting the world. Dump the press release, get a pep talk from TF and get back out there Kylnveldians. Here’s to 2010!
KPMG UK chief lines up modest 2010 growth [Accountancy Age]

KPMG Has to Be Pretty Happy with the Golfer They Chose to Sponsor

Phil-Mickelson_Tim Flynn.jpgAs we mentioned yesterday, Accenture is on the hunt for a new poster boy. While we speculated that poaching Phil from the House of Klynveld as a possibility for Accenture it’s more likely that the spotlight will be falling on Mickelson and his KPMG cap (black or white, depending on the mood).
Although Phil won’t be dancing on Tiger’s grave, Tim Flynn may have been quietly making the rounds at 345 Park high fiving anyone and everyone at work on the Monday after Tiger’s crash.
If you’ve got any thoughts on how TF celebrated (sweater vests for everyone!) discuss in the comments.

Operation Bear Hugs Debrief

Thumbnail image for Tim_Bear_King_jpeg.jpgSeriously Kylnveldians, we were hoping for a stellar report on last Friday’s nationwide Bear Hugs but so far we’ve heard nothing (other than some people were bolting early to get their drink on).
We’ll take your radio silence as admission that you had an awesome time and that not having an open bar rager wasn’t so bad after all. Besides, it’s for the kids.
There’s video of the New York Office’s get-together over CBS2 where we learn that there was actual sewing involved and a dancing bear to keep everyone entertained.
Share your thoughts on the experience including if your bear’s head ended up on its ass, if you couldn’t resist spiking the punch, or if you were MIA and what your punishment is.

Rumor Mill: KPMG Debunking ‘Six Year Manager’ Rumors?

corp_ladder.jpgWhile many Klynveldians are getting amped to cobble together some bears for the kids this morning we’ll pass along a little rumor about a rumor.

The rumor that the KPMG bigwigs have been considering a six year timeline to make manager in the audit practice has been kicked around for at least a couple years. Naturally, there were two schools of thought:

• Managers thought it was good idea

• SAs thought it was a terrible idea

According to a tip we received, apparently there is an email floating around that says the rumors about a “six year program are not true and that the firm will continue with existing promotion timing.”

A friend of GC told us that while it’s entirely possible that such an email exists, it’s definitely not coming down from 345 Park and could be some local office trying to calm down those SAs that are considered flight risks.

Regardless of the rumored debunking, the path to partner is certainly becoming longer as we reported earlier this week, and early promotions will still happen based on need or political maneuvering.

If you’ve been notified that your promotion timing is still on track, by email or otherwise, pass the info along or discuss in the comments.

Are You Ready to Build Some Bears KPMG?

Tim_Bear_King_jpeg.jpg“Tim, you really shouldn’t have. Seriously. I’m a King, for crying out loud.”

In case you’ve forgotten, KPMG’s bear-building extravaganza is tomorrow and word around the campfire is that everyone is psyched.

At least one office is dedicating the better part of the morning to the “Town Hall” portion of festivities which sounds like it could be a real hoot. We’re guessing there might be a little session regarding stationery controls, given the whole Canopy sitch.

Since all the offices are having their get-downs tomorrow keep us updated throughout the day on anything interesting that comes up.

(UPDATE) KPMG’s Letterheadgate May Require the Firm to Revisit Stationery Controls or Get Rid of the Blue Squares

kpmg_pink.gifAll right Klynveldians, we don’t know which one of you was a little generous with the letterhead but you’ve really done it.
Jeremy Blackburn, COO and President of Canopy Financial was able to raise $75 million for Canopy Financial based on bogus audit reports he provided to investors and pocketed more than $2 million for himself, according to the SEC’s complaint against Blackburn and the Company.


We’ll give the man credew the script:

Blackburn sent [Canopy CEO, Vikram] Kashyap an email dated June 30, 2009, attaching the KPMG Audit Report and the audited Canopy financial statements, with an email subject heading of “Audit Finally Complete,” and email text stating “I never wanna [sic] go through this again!!”

Kashyap apparently wasn’t in on the little secret that KPMG was not engaged to audit squat for Canopy. Nice work staying on top of everything, Vik. Meanwhile, Canopy’s investment bank, Financial Technology Partners, didn’t need an email telling them the audit was hell. They just ran to VCs with the notion that everything was on the up and up.
The bank is all bent out of shape because they’re taking heat and claim ‘We clearly had no clue about any such wrongdoing.’ Who wants to bother with the auditors? As Michael Arrington of Tech Crunch notes, “A 10 second phone call could have cleared this up before investors plowed $85 million into the company.”
The whole thing finally went south when Canopy’s new general counsel contacted an acquaintance at KPMG to help him find a new CFO. Canopy’s general counsel then sent over the “audit report.”

KPMG quickly responded to Canopy and advised Canopy in a “Cease-and-Desist Demand” letter dated November 3, 2009, that Canopy used KPMG’s name without KPMG’s authorization and consent. Further, KPMG told Canopy that it: (1) had never been retained nor agreed to audit any of Canopy’s financial statements; and (2) did not issue the audit opinion dated June 29, 2009. KPMG demanded, among other things, that Canopy “immediately CEASE AND DESIST from using the subject report and/or the unauthorized use of the KPMG name….”

It’s seems obvious that KPMG did nothing wrong here but this is still a big bowl of awkward. The firm’s name is all over the complaint and who knows how many other companies are running around with the firm’s letterhead throwing their “audited” financials around.
As we’ve indicated, this may call for a completely new look for KPMG. That means no more blue squares. We realize that’s a horrifying thought but the whole firm may be compromised. If you’ve got suggestions for the look (other than pink) or any thoughts on this snafu, discuss in the comments.
UPDATE: A tiny clarification/correction here: The original post over at Tech Crunch states, “Multiple sources have told us that Canopy was absolutely making up their financial statements, even forging audited statements with fake KMPG [sic] letterhead.” One could get the impression from our post here that genuine KPMG letterhead was used. That does not seem to be the case. The SEC’s complaint states that the audit report was “falsified” or “forged” without mentioning the authenticity of letterhead.
Nevertheless, we still stand by our conclusion that the Firm has no choice to either revisit stationery controls (since it’s obvious you can’t just get the shit anywhere) or change the entire logo as a precautionary measure. Similarly, we will continue to address this particular scandal as “Letterheadgate” to best follow the tradition of any scandal happening in the post-Nixon era to be suffixed with “gate”. We’re done here.
Canopy Complaint.pdf
Canopy Financial Turns Into Sad, Comical Game Of Hot Potato [Tech Crunch]
Earlier: KPMG Will be Stingy with the Letterhead From Now On

(UPDATE) KPMG Will be Stingy with the Letterhead From Now On

Thumbnail image for 200px-KPMG.svg.pngHave you been craving a tech startup accounting scandal? Thought so. Enter Canopy Financial, Inc. who “provides technology-enabled electronic payment, account management, and investment technology platforms for health savings accounts, flexible spending accounts, and health reimbursement arrangements.”
The company was ranked #12 in the 2009 Inc. 500 List of fastest growing companies in America:

In 2008 CEO Vikram Kashyap said his company had 2007 revenues of $9 million. More recently, we’ve heard, the company was saying they’d hit $60 million in revenue and $9 million or so in EBITDA.
All of this may have been lies.
Until recently all the venture capitalists involved proudly placed Canopy Financial on their portfolio pages. Now all trace of the company have been erased from the portfolio pages of investors GGV Capital, Spectrum Equity and Foundation Capital. And their investment bank has erased them from their trophy page as well.
So what happened? Multiple sources have told us that Canopy was absolutely making up their financial statements, even forging audited statements with fake KMPG [sic] letterhead. And somehow the investment bank and all the investors never figured it out.

Jesus, this doesn’t even qualify as cooking the books. This is more along the lines of:

CFO: No, we cannot say $100 kajillion.
CEO: Why?
CFO: Because no one will believe it.
CEO: Why?
CFO: Do you know what a kajillion looks like?
CEO: Um, no.
CFO: It has to look like a real number. I’m saying $59,984,387.
CEO: What about…
CFO: Shut up, that’s the number.

Then all you have to do is get your hands on some KPMG letterhead and BAM your company is listed in a magazine.
We tried contacting KPMG about this but our emails have gone unreturned. We’ll let you know if we hear back from them. In the meantime, if you know anything more about this particular story, enlighten us in the comments.
UPDATE: See the clarification about the authenticity of the letterhead on our post from December 3rd.
Canopy Financial Accused Of Serious Financial Fraud, Investors Burned [Tech Crunch via FINS]

The KPMG Dress Code Now Accommodates Ugly Christmas Sweaters

Ugly Sweaters 130.jpgAt least for one day, anyway.

You’re all acutely aware that many firms are opting to forgo holiday parties this season in favor of charitable activities.

Regardless of your desire — and our sincerest hopes for you — to get cop-slugging drunk on your firm’s dime, the commitment of time to charity is admirable. KPMG is spending an entire day building bears and wrapping them with books. We’re not sure how that will work but whatever.

As an added bonus, we heard that at least one office is attempting to make things more festive:

Picture 4.png

If some of you aren’t able to get behind the celebration of hideous Clark Griswold-esque sweaters for the sake of sport, shame on you. In fact, since the charitable activities are mandatory (as we understand), we’d go so far to suggest that the donning of ugly sweaters should also be mandatory. Judging by many or your fashion proclivities, this will be as easy as opening your closet.

Caption Contest Monday: The King and I

TimFlynn_KingAbdullah.jpg
Background: Tim Flynn talking shop with King Abdullah of Jordan.

Same rules: Submit possible captions in the comments. We’ll choose our favorites — with preference given to those with an accounting/KPMG bent — and then let you vote for the best one.

Memo to TF: If you’ve got a transcript of the convo, feel free to post your favorite highlight as your submission(s).

Rumor Mill: KPMG L.A. Layoffs, Maybe Dallas?

We’ve received multiple reports of layoffs that occurred last week in the audit practice of the Los Angeles office.
The numbers have been described as “a few” and the news has been “hush hush” making us wonder if these cuts were some unfinished business from either the August and September rounds.
There also have been rumors about additional layoffs in Dallas tax but we don’t have any more details than that.
If you’ve got any details for these layoffs or details for other cities, get in touch and discuss in the comments.

More KPMG Leadership Changes

Thumbnail image for Thumbnail image for Thumbnail image for PomeranianSP1324.jpgJust a brief update on KPMG leadership moves that we’ve been following.

Late Friday we learned that the office managing partner (“OMP”) of the New York office has been promoted to serve as the Vice Chair of Market Development. Our understanding is that all the OMPs across the country will report to this position and it will focus on 21 key markets in the U.S.

The former head of the New York Financial Services will move up as the new New York OMP. No word on who will fill the leadership role in NYFS.

This appears to be the first instance where the OMP was promoted to a national position as opposed to a “client-facing role”.

Continue to keep us updated with the latest on the comings and goings of the grand poobahs and discuss your thoughts on the progress of the restructuring in the comments.

Earlier GC coverage of KPMG Leadership Changes and Restructuring:
Another KPMG Shake-Up
KPMG Shake-up Continues
Rumor Mill: KPMG Restructuring Plans
(UPDATE 2) KPMG Atlanta Shake-up Makes Us Wonder

Another KPMG Shake-Up

Thumbnail image for Thumbnail image for PomeranianSP1324.jpgFollowing up on our earlier reports of leadership changes in several cities, — as well as the Southeast region — the Charlotte Business Journal is reporting that John Switzer now sits in the big chair of KPMG’s Charlotte office.
Swizter ascended to the new gig after serving as the managing partner of the Cleveland, Louisville, and Lexington offices.
This appears to be another restructuring switcheroo as Switzer’s predecessor, Paul Chapman, will be “[taking] a new role, serving some of the firm’s largest audit clients.”
As prestigious as that sounds, we’re inclined to believe that the bigwigs decided some fresh blood was needed in Ken Lewis land.
If you’ve got any news on freshly minted grand poobahs in your office, kindly pass along the details and feel free to speculate on the progress of the restructuring in the comments.
KPMG names managing partner [Charlotte Business Journal]

KPMG Has Its Reasons for Banning Google Talk

Klynveldians have been warned about certain software that should not, under any circumstances, be downloaded by any of you:
Picture 3.png
In the firm’s defense — and since they didn’t mention it — many of these programs are used by you to waste precious billable hours complaining to each other about a myriad of things including why the Phil Mickelson hats only come in black and white and where Tim Flynn and John Veihmeyer buy their suits (we hear Marshall’s but that could be total bupkis).
Furthermore, we’re not going to sit here and say that none of these programs present a legitimate risk. That would be foolhardy and insensitive.
What we do wonder about is what “disciplinary action” involves. Feel free to wildly speculate on this in the comments.

Caption Contest Results: KPMG Scary Stories

Not a surprising choice but we thought it would be a closer race. The winner, garnering 45.5% of the vote, after the jump.
Thumbnail image for RL-Stine-and-kids_350.jpg

KPMG hires replacements for staff who were laid off.

What’s not known is what kind of offers they are getting. It’s an absolute certainly that it includes the standard CYA language: “Due to the volatility of the current economic conditions, your starting salary may be adjusted to market at the time you begin employment.”
Thanks to everyone for voting and we’ll have the results from our salary satisfaction poll later today.

Caption Contest Poll: KPMG Scary Stories

It’s election day after all. Vote for your favorite caption. You have until tomorrow night, 11:59 PDT to vote.
Thumbnail image for RL-Stine-and-kids_350.jpg
Finalists after the jump.

Caption Contest Reminder

Thumbnail image for RL-Stine-and-kids_350.jpg
Don’t forget to submit your captions for last Friday’s contest. We’ll take submissions through midnight tonight and run the poll tomorrow morning.

Caption Contest Friday: KPMG Scary Stories

Pictured below is R.L. Stine, often known as the “Stephen King of children’s literature”. Mr. Stine did some pre-Halloween scary story-telling yesterday while visiting students. The occasion celebrated KPMG’s Family for Literacy distributing its one-millionth book. “I think it would be a very scary world without books,” said Stine.
RL-Stine-and-kids_350.jpg
Rules: Submit possible captions in the comments. We’ll choose our favorites — with preference given to those with a Big 4/KPMG/accounting bent — and then let you vote for the best one.

Whatever You Do, Don’t Bring Up Tax Shelters

Thumbnail image for bowling.jpgWell you can if you want but somebody will probably flash a piece on the lanes and you’ll end up entering a world of pain.
If you’re in Beta Alpha Psi at the University of Illinois, KPMG is hosting a charity bowling event tonight at 6 pm. Hell, even if you’re not a member you should do a jay and head on over and get your roll on. What’s the worst they can do, throw you out?

KPMG Partner Named in $240 Million Tax Fraud

This is getting awkward, KPMG. Tax shelters continue to be a problem for some of your partners.


Fairfax Times:

Three local businessmen have been indicted on a charge of conspiracy to defraud the Internal Revenue Service of more than $240 million.
According to the indictment filed in federal court on Oct. 22, two of the men allegedly attempted to defraud the IRS by making several “false and misleading statements” concerning a corporate tax shelter that was implemented by them.
Daryl J. Haynor, a partner in KPMG’s federal tax practice for the mid-Atlantic Area, based in Tysons Corner; and Jon Flask, a Vienna-based attorney, are both named in the suit.
“Mr. Haynor has been placed on administrative leave pending a review of the situation,” said George Ledwith, a spokesman for KPMG, on Monday.

Obviously our little warning concerning tax shelters was way too late.

According to the federal indictment, Flask, Haynor and Parker implemented and marketed a tax shelter named “Sale Leaseback of Tenant Improvements Strategy (SLOTS),” from 1998 through 2006.
The shelter enabled various U.S. corporations to claim tax deductions totaling more than $240 million on corporate income tax returns.
The indictment alleges that Flask, along with Haynor and Parker, misled and deceived the IRS by misrepresenting facts concerning the SLOTS tax shelter during IRS audits of companies claiming tax losses generated by the shelter in the years 2002 through 2004.

Mr. Haynor has been with KPMG for over 25 years. He and Mr. Flask face up to eight years in prison and $500,000 in fines. If you know any details, shoot us an email or discuss in the comments.

Someone Is Letting KPMG Employees Handle Firearms

Judging by everything that has gone on in the past few months, we can’t emphasize enough how dangerous this could have been. Video after the jump.



Some Atlantans Get to be a Cop for a Day [Fox 5 Atlanta]

Rumor Mill: KPMG Wants You To Stop Smothering Your Kids

Klynveldians, what are you doing today at 2 pm? Nothing? Here you go:

As we continue to observe National Work & Family Month during October,
KPMG will host a national MSO from Lifeworks entitled Being an Involved
Parent: How Much Is Too Much? on Thursday, October 22, from 2:00 p.m. –
3:00 p.m. ET.
This special session is designed to help parents:
§ Understand the traits of overly involved parents
§ Learn the long-term consequences of over-involvement
§ Identify strategies for raising self-reliant, resilient children
§ Find a balance of involvement that will help children ultimately become
independent adults.
If you’d like to join us for this session, be sure to sign up today!

Don’t have kids? No worries. This will load up your queue of excuses for why you’re working late after you enter parenthood.

The Moment You’ve All Been Waiting For

thumbs up2.jpgIf you work at KPMG anyway. We heard that the annual employee survey was sent out today so that’s exciting. The most thrilling news is that FIVE of you will win $200 AMEX gift cards for participating. If there are questions missing on the survey that are not addressed, feel free to bring those up in the comments.
The only other firm that we’ve heard about having their survey is E&Y so if yours is rolling out be sure to let us know.

(UPDATE) Madoff Investors Sue KPMG, JP Morgan, Bank of New York Mellon

By our last count KPMG had been named in ten lawsuits related to Madoff feeder funds. What’s one more?

KPMG, JP Morgan, Bank of New York Mellon, Oppenheimer Acquisition Corp. and Mass Mutual Life Insurance, along with the Tremont founders were all named in an amended lawsuit that was filed yesterday.

Cotchettt, Pitre, & McCarthy, the attorneys for the Plaintiffs, are not mincing words on KPMG’s part in the whole mess. From the firm’s website:

The sheer size and scope of the fraud make it impossible for Madoff to have acted alone. The complaint alleges JP Morgan and the Bank of New York as well as powerhouse accounting firm KPMG LLP and their international counterparts, KPMG UK and KPMG International were primary players responsible for the fraud.

The amended complaint further alleges that the phantom trades “should have been discovered by KPMG UK, the auditor for Madoff’s London based operation, Madoff Securities International Ltd. Instead, KMPG UK never raised any red flags that investors’ money was used by Madoff as his personal piggy bank.”

KPMG declined to comment for the Reuters article but we’ll assume that they don’t take kindly to the complaint.
Madoff investors sue KPMG and major banks [Reuters]

MADOFF_WEXLER_FIRST_AMENDED_COMPLAINT.pdf

UPDATE: The UK Firm issued the following, per Accountancy Age:

KPMG considers the allegations in the complaint to be wholly without merit and will defend them vigorously. The complaint cites KPMG in its capacity as statutory auditor of Madoff Securities International Limited (MSIL), a London based company directly owned by the Madoff family. KPMG acted in this capacity for several years and issued unqualified audit opinions on MSIL’s financial statements. We are not aware of any suggestion that the financial statements of MSIL contain errors.

KPMG Halloween Party: Don’t Expect Treats in the Form of Bonuses

With the cancellation of Christmaskah by most of the Big 4, one would think that a small Halloween fiesta would at least be possible (you know, for the kids).
Good news! At least one KPMG office is contemplating the idea, with the local staff’s help (italics are from the original email):

For $5 you may wear jeans. All donations will be used for the Family Halloween Party. If you would like to participate, please see [redacted] at the reception desk on the 27th floor.

Please note that if you are at a client site that does not subscribe to jeans day, you still need to dress to the client’s dress code.

Please remember you are still in a professional environment and wear professional clothing with your jeans. Additionally, please wear jeans that are in good condition to obtain a clean, professional appearance.

Got it? You want bite-sized 3 Musketeers, Snickers, and the like, you can pay for it. And btw, if you come in with frayed hems, your ass will be sent home.

KPMG Detroit MIA from Free Press’s ‘Top Workplaces’ List

Disappointment.jpgWhen we learned that KPMG had been left off the Detroit Free Press’s list of Top Workplaces 2009, we thought that it had to be a mistake.
We’re so used to accounting firms being found on “Top Place to/for [enter anything about yourself here]” lists that we almost called up the DFP to demand a recount. Then we got to wondering what HR/Marketing did with the boilerplate email to be sent to employees? Just save the draft and said, “We’ll get ’em next year”?


Well, this is all very awk. Especially since PwC (dropped from the top spot last year, btw), Deloitte, and E&Y find themselves in #2, #3, and #4 on the list for large employers.
So far we haven’t been able to determine if KPMG Detroit has been on the list in years past (which at least makes them consistent) so maybe Motown has decided to pack it in. The firm makes every national “Best of” list but is omitted from your own city’s list? How do the local bigwigs spin that one?
We realize that we didn’t make the Best Workplaces list here in Detroit but we have made many national lists. You can all take comfort in knowing that KPMG is a great place to work in every city but ours.
Regardless of how seriously the firms take the “local” lists, for the other three firms to be listed and the Radio Station to be MIA makes for a big bowl of “how the hell do we explain this one?”. Especially when you consider the methodology: “The rankings are solely based on employee feedback.”
Look, we could sit here and speculate on the reasons why KPMG was left off the list but we’re better off leaving that to you. Discuss the Radio Station’s omission in the comments.
Alphabetical listing of Top Workplaces 2009 [DFP]
Large employers survive by encouraging inclusion [DFP]
Earlier: Rumor of the Day: Deloitte Snagging Chrysler Audit from KPMG?
Earlier: Chrysler Auditor Switcheroo Follow-up

KPMG Shake-up Continues

Thumbnail image for pool boy.jpgMore pool boy shake-up news out of the Radio Station as both the Chicago and the DC offices are welcoming new office managing partners, according to our sources.
So by our count that makes four new OMPs along with two area managing partners being moved into the client-facing roles.
Discuss details on any of these moves in the comments and if you have restructuring details, pass them along.

Rumor Mill: KPMG Restructuring Plans

Thumbnail image for PomeranianSP1324.jpgWe’ve finally received some details on a possible restructuring at the House of Klynveld in the U.S.
According to our source, the plans were announced over the past week on a series of calls by Tim Flynn. The firm would be consolidated down to two regions, East and West and each would have a regional managing partner and one service line managing partner per region.
This would result in the elimination of one level of regional leadership and would transfer several partners into client-facing roles.
The restructuring would also include placing some partners on ‘profit improvement plans’ and some layoffs would occur over the next year. Additional staff layoffs would occur across all ranks over the next year as well.
The bad news is obvious. The silver lining, as some of our other sources have indicated, is that the Firm would be eliminating at least one level of bureaucracy that should allow partners to be more active in developing potential client relationships.
Messages left with KPMG were not immediately returned. We’ll update you with any response that the firm gives us.
If you can expand on of the details we mentioned on this restructuring, let us know, otherwise, discuss your thoughts in the comments.
Earlier: KPMG Atlanta Shake-up Makes Us Wonder
UPDATE, 4:45 pm: Regardless of this rumor, we learned a short time ago that KPMG admitted thirty-six new partners last month. Seventeen in Audit, twelve in Tax, and seven in Advisory. Congrats to the new partners! No, seriously. Good job.