Big 4 Starting Salaries – The Facts
Well, in the tradition of the WSJ Law Blog and their open disclosure of salaries for first year law firm associates, here you go.
I received quite a few responses to my research request before the holidays that included detailed information about starting salaries. I also had quite a few respondents that had received offers from all four firms, or at least two or three. That, and my previous experience and knowledge of how the firms work, allowed me to come to this non-scientific conclusion:
There is informal, if not formal, collusion on the part of the Big 4 firms, with cooperation of the accounting professors/schools, to fix starting salaries and give the students no chance to negotiate if they have special experience, skills or circumstances.
The following numbers are based on my very limited sample and my experience and are for students with Masters in Accounting. For undergrad, subtract US$ 3-5,000. The numbers are applicable to the East and West Coasts of the US, where salaries and cost of living is higher. For the Midwest, subtract US$ 5-7,000 on average.
For Canada, I’m not sure what the story is, but I’ll tell you what it should be. If there’s no exchange rate difference now, you guys should be paid comparable to your US colleagues.
One of the big complaints of the Master’s students is that they spend a lot of extra money to get the Master’s, sometimes in order to get enough hours for CPA requirements in certain states, but the salaries are not really significantly different from undergrad to pay for the extra time. They all start as 1st year staff anyway.
As you can see, these salaries all hover around a total package of $62-65,000, salary and bonus, with different mixes of salary and bonus offered to make any particular student feel special. There are regional and potentially office differences. I promise to update or adjust as you, the reader, provide more data.
Should you try for a bigger salary or a bigger bonus? If you have the choice, and that’s a big if, I would take the cash up front, even with a payback requirement for not staying the year or two commitment they require. A higher starting salary pits you at a higher salary compared to your peers and means lower raises later, assuming you all do equally well. You’re going to stay within a range, from a base salary perspective, for a while. Any base pay differential evens out over time. The raises for employees with grad degrees are often a smaller percentage – even though the actual RAISE might be bigger the first year or two, it’s because it’s calculated from the bigger base salary.
So always take cash up front! (If they lay you off after the first year, they won’t make you pay it back…)
Then there’s the overtime issue. We’ll have to see what comes out of all these lawsuits. But I hope it is justice.
EY: $60k + $5k bonus (1 year commitment) + 15 vacation days (10 firm holidays) + $1k relocation reimbursement after acceptance of the offer.
@100 – The firms have been activly managing their headcounts for the past year and a half through a number of inovative measures. the primary way seems to be severance packages. Thanks to federal laws, everyone they have let go is entitled to continue their health insurance [unless of course you are here on an working visa, in which case you are given a plane ticket]. These persons are more than welcome to apply again for jobs at a later date, assuming they want too.
On a more serious note, there is year round work in the auding profession, you just need to know where to look for your billable hours to ensure you have client work year round(reviews, EBPs, non-public company audits…..).
anyone know what first year manager base compensation is for NYC EY, PWC, DT, and KPMG???
Similar to 102…anyone know first year Mgr base compensation in the San diego/San Jose office for big 4?
@ 102… From the previous 2 (09 & ’10) compensation calls at D&T in the NYC metro area, the base for new Managers is between 82-85K. Not sure what the figures are for the other Big4 but I would imagine that it is pretty identical.
The indentured servants who came over on the Mayflower got paid better than the Deloitte New York office.
@105 – HAHAHA…very nice
Does anyone know what a Senior 3 should expect to make in NYC at PWC or Deloitte in Assurance or Internal Audit? I am moving from Boston to NYC from a “second tier” national firm and looking to join a Big 4, going into my third year as a Senior (going into my fifth year overall). I know that the pricing is different because of the cost of living adjustment as well so I wasn’t sure what I should be expecting.
Australian Big4 graduate salaries all average around $55,000 p.a. with 4 weeks paid annual leave (as required by Australian labour regulations).
In NYC a third year senior should make US$75K plus variable pay ($7500) if you are lucky. The only challenge will be you will be moving from a second tier audit firm the Recruiters at the Big 4 can often be snooty and they get a kick out of making stingy offers from folks from non Big 4 firms.. therefore you may not be offered this much..
Also, I have a phenomenal line of site of how starting salaries are determined by the BIG 4 firms in the US and currently its not a collusion game, actually most of them get their data from Tower Perrin and though i believe most of them would like to start the kids out at 50K its competition triggered by one firm which is a bit out of line forcing the others to play catch up.
In my 6th season at Arthur Andersen’s NYC Financial Markets audit division, I found myself being billed to clients at over $400 an hour as an acting audit manager and taking home less than $30 an hour. I had a degree from NYU Business, graduating 3 terms Dean’s List and only exceeds ratings as an auditor and consultant. I earned less than 1/3 of the salary of a starting lawyer, while being billed out at over 13 times my take home salary.
Auditors should not so underpaid.
Auditors should also not be primarily inexperienced qualified with only a recent university degree. but should be those with decades of experience who fully understand and have experienced the industries they are reviewing financially. The big 4 should recruit from industry, not from the university.
The current system is in tremendous need of reform.
Why do entry-level auditors need “decades of experience” and to fully understand the industry they are reviewing? If anything, a college degree is too much to ask of a first year auditor. Much of the work staff and seniors do could be performed by bright high school students or outstanding middle/elementary school students. Most of what auditors at these levels do is reformat the spreadsheets provided by the client into a clear and understandable format (read: the format used during the prior year’s audit) so that the higher-ups can make effective decisions. Having decades of experience in industry would completely overqualify you for the type of work you do as a staff.
I agree that there are plenty of things wrong with the current public accounting model, but placing an emphasis on hiring from industry instead of from college would not solve them.
@1st Year Staff
I think you actually make his point. The reason being is that the work done by 1st year staff should not actually just be stuff that can be done by a highschooler. What ends up happening is that in the complex corporate world of business and ever changing complexity of transactions, you essentially only have 2 lines of defense (the Manager and the Partner) instead of 4 (the associates, seniors, managers and Partners). Given that the individuals with the most exposure to the day to day audit are the seniors and staff (who are performing the grunt work and interviewing the personnel), losing this line of defense can be costly to the overall quality of the audit.
As someone who had some industry experience myself before going into audit, I can say that the way I approached things was very different than my peers. Having implemented a accounting information system prior to auditing, my view of a company’s control over their information system integration after an acquisition was much different than if I had never seen one actually done.
The previous experience allows you to see the big picture much faster as well as appreciate some of the difficulties that real companies face. While I think it’s unrealistic to require previous experience (given much of what is currently expected of initial staff and seniors as well as their pay), if the goal is overall audit quality, then it could only help.
Hi, following up on the above, I thought it maybe useful for folks to have a perspective of what the BIG 4 salaries are in emerging markets like India the numbers i give below are fairly consistent across the Big 4 and have reasonably fact checked for India member firms of these international firms.
Associate – [ INR 500,000-600,000] US$10K-12K
Senior : – [800,000-950,000] (starting) US$16K-19,000]
Manager – [INR 1,500,000-1,650,000] starting [US$30K]
Senior Mgr [INR 2million-2.2 million] starting
Director [ INR 3.5 million- 4.5 million] starting [US$70K]
Partner [ INR 8 to 10 million] -US$200K
Enjoy where will you get such a handy ready recknor. Needless to say all these emerging market guys having costs of living which is comporable to their counterparts in the west as cars, cellphones, fuel, TV cost the same or a lot more in emerging markets than in the US due to high VAT and custom duties and these guys have to work much longer hours getting paid so much lesser. cheers
A Big 4 first year in St. L is making 48-52k start, 2-4k signing bonus, 5k cpa bonus if passed within 2 years, all testing and licensing materials paid or reimbursed.
Also, a retention bonus was recently passed to incent longer stays. Bonus pays about 15k over 2-3 years if you stay from start until manager. This bonus is payable once promoted to manager.
So, just to make sure I have this right:
E&Y: $60k + $5k bonus
An undergrad is looking at $3k to $5k less on the starting salary? The majority of hires are undergrad so it is surprising that the salary focus of this article is grad students. Grad students, typically those with non finance undergrad degrees, usually have less finance/accounting under their belts than undergrad accounting students. While they do get higher pay ($3k-$5k) to compensate them for the add’l years of schooling/experience, they are often not worth the bump in salary. An undergrad student (with maturity) can easily do as well, job performance wise, as a grad student.
FOR THOSE NEW STAFFERS AND SENIOR ASSOCIATES, hang in there. Don’t focus on this short term pay-back of starting salaries. The experience gained from those first two to five years with the BIG 4 are significantly more valuable than the pay you receive.
Wow! is that $3-5k a month? Because over here in Malaysia we get RM 2800 a month for students with a Degree and a Professional Qualification. That is around $912 per month (with the current exchange rate). You guys are blessed. I wish I could work there someday
I just got an offer from Deloitte, for about $57k + $5 bonus, I tried to negotiate but it did not work, I was told that this is there best offer, I will be taking about $20k less than what I currently make as a corporate accountant, I have an MBA and I have already passed the CPA (I need the CPA hours though). I really wanted to be in public accountant so one day I could be either a partner or have my own firm.
Just wanted to share a 2012 update. I work at a Big 4 in their IT Audit group. My understanding is we’re paid at a higher rate than our financial counterparts because we are “specialists” (which is unfair, because I think you people in financial audit are smarter and work much harder :)).
I’ve been with the firm two years, started in 2010 at ~50K, and just learned that my new salary will be ~59K when promoted to Senior 1 in the coming months. If the numbers from prior year posts above are accurate, it seems that salaries have taken a beating. Although, its fair to mention I’m in the south west with a lower cost of living than say NYC or CA. Complaining aside, my salary is enough for me to live comfortably as a single individual. Obviously, more would be welcome – but I can live without it.
To those that may consider complaining, realize that 50K puts you at the 57th percentile of income overall and 87th percentile for a single earner (at least, according to http://taxpolicycenter.org/numbers/displayatab.cfm?DocID=2970) – I’m sure it varies somewhat depending on who’s chart you’re looking at. You’re not in a bad place (that’s what I keep telling myself :)).
Thanks for that update. And that dose of good sense. 🙂
1) Can anyone speak to starting compensation in audit at a Big 4 in the Bay Area or other large metro for a former intern and new graduate with 150 hours (finance and account) but no masters? Does the hourly rate during the internship accurately reflect what the salary will be when it is projected across an entire year at 40 hours per week?
2) I am not to so naive as to think that as a first year I am worth gold, but first year comprehensive compensation should reflect the extra working hours during busy season that are not payed at overtime.
I realize that compensation is what it is, but I would like to have an idea about what my financial situation will look like when I begin working in a city that has one of the highest costs of living in the US.
Thanks for the consideration!
I would love to know info about San Fran also, but for a different set of circumstances. If anyone could give me a tidbit of advice it would be much appreciated.
2012 – Finish Master’s of Accountancy program (on pace to graduate with a 3.7 to 3.9, currently 3.9)
2013- December (2012) to March internship
2013 – March to December (Take/Pass the CPA)
2014 – December/January start full-time job.
My question is what should I look for in an internship? Also, what salary could i expect for San Francisco for a full-time position?
60,000 no master in NYC in tax. First year.