Friday – Questions, Answers, Thoughts, and Impressions

It’s a dreary day in Chicago, rainy, cloudy, and just cold enough to put a chill in my old bones.

If I didn’t have a trip to New York coming up, I might be a tad blue. Instead I am super excited to have been invited by FEI to cover the Financial Executives International’s annual Conference on Current Financial Reporting Issues (CFRI). This year’s conference will be held on November 17th and 18th at the Marriott Marquis Hotel in New York. CFRI is the must-attend event for preparers of corporate financial statements, and will be attended by senior executives from a comprehensive group of corporations and government sponsored entities, including a keynote by SEC Chairman Chris Cox. I remember the last time he and I met…
If you are in New York, please stop by the Half King in Chelsea after 6 on Tuesday the 18th for a “Tweet-Up.”  A Tweet-Up is an opportunity to meet people you converse with via Twitter ” in the flesh.” There are quite a few journalists, traders, lawyers, exchange executives, advertising/PR, media celebrities, and even some accountants that I talk to who make NYC their home base.  
Given the recent election of a local guy to be President of the United States, Chicago is now the center of the political universe.  There are sightings all over town and, in particular, at the Kluczynsky Federal Building where the FBI has its main offices.  It’s said that President-elect Obama has his daily CIA intelligence briefings there.  There’s also word that Senator McCain is visiting Monday to offer his support.
I’ve been receiving reports via comments, emails, and now copies of press releases of significant layoffs at KPMG in audit and “consulting.”  Go here for some new comments on an older post.  Here is the press release.  
Unlike Deloitte at first, and in particular “poor performers only” PwC, KPMG got out front and issued a press release.  They also made an effort to point to the economic situation as opposed to “natural culling of the herd” as the reason for the cuts.  Deloitte did that too in their late August press release, issued after too many questions surfaced on this blog and others about the significant reductions they made and are still making.  I think it does a humongous disservice to professionals, both personally and professionally, when firms aren’t up front about reasons for reductions and leave both the former employees and their future employers wondering whether there was or wasn’t a “personal problem.”  
It boggles my mind how any Big 4 firm can blame the employee for “performance issues” after less than two or three years of service when all hires are vetted to the “nth degree,” are top graduates of their schools, go through a long interview process, background checks and plenty of interviews and social events.  Whose fault is it if someone “does not make it?”  Whose fault is it if the person “doesn’t fit?”  
And so, given everything that is going on — the dramatic shifts in competitive position in some industries of the firms, the reductions and the general malaise affecting the profession due to scandals, more scandalslawsuits, and more lawsuits — I must now answer a question posed as a comment to my post, “Why the Big 4 Also Deserve Blame For the Financial Crisis.”
Anonymous asks:
Francine, over the past few months, you’ve provided lots of good information about the Big 4 accounting firms. Based on the information at your disposal to date, which of the Big 4 accounting firms would you suggest that a brand new accounting grad join? Please only pick one and explain your rationale.

I would have picked PwC, because they seem to have inherited the most work from this financial crisis. The other firms seem to be losing work, which may eventually translate into layoffs.

I would rank E&Y second and KPMG or Deloitte 3rd or 4th. What are your thoughts?

Dear Anonymous,
I would first direct you to an earlier post, “Hmmm, Do You Suddenly Find Yourself With A Lot Of Free Time?”
Whether as a new graduate you fear you won’t get the job you want, your offer is deferred, or you are “reduced,” there are things you can do to be productive until the situation improves.  The Big 4 is not the be-all, end-all, even though that may be what you have been led to believe.  Even though many companies are reducing staff, cutting expenses, and otherwise scaling back, good people can always find good opportunities.  
I have been telling folks, and not in a joking way, that if I were a new grad or really at any turning point in a career and really interested in getting into the thick of it, I would apply for a job at the SEC or via the website for appointments to be made by the new administration.  Like it or not, the public sector is going to be where the action is for accountants and auditors for a long time.  Public service, especially in my opinion, in an administration so set on making a change and a difference in the way things are done, seems to me like a once in a lifetime opportunity.  
You may also want to consider a smaller or regional firm.  However, two of the three next tier firms here in the US, Grant Thornton and BDO Seidman, are also besieged by significant litigation risks. The smaller the firm the more quality of staff, mix of clients, investment in training and tolls/methodologies, and strength of leadership varies by office and by geography, even more than the Big 4.  If you are looking at a smaller or boutique firm, you have to look even harder at their partners, their client list, their track record. Like when one chooses to go to a smaller university or a start-up company, you’ve limited options and increased your risk in the event of a sudden change in circumstance or if you change direction.  It’s important to know your “major” and go to the firm that is very good at doing what you do well or want to focus on.  Ask those hard questions of interviewers.  Don’t accept the generic answers.  Kick the tires very hard.
And if you are still considering the Big 4, I can’t tell you which firm to choose.  And I will never tell you not to go at all.  There are many good reasons why the Big 4 is still a good place for many to start their career and for some to enjoy a rich and successful career. I won’t be talking about that much.  I do, on occasion, highlight the good points of a firm, a person or a particular situation. But that’s not my focus.  You can go to so many other blogs (some of them on my blogroll to the right,) university professors, and the firms’ sites themselves to hear their sales pitch.  It’s not all hooey, but it should be listened to with a few ounces of skepticism at all times.
So, for my guidance on how to choose, I will point you here.  And I will repeat some comments I made to someone via email this morning:
For any position, internship or full time, the most important criteria is the people you will be working with – are they smart, are they people you can respect and who respect you, can you learn from them, are they the kind of people you can tolerate at 11:00 pm, after a long day, when you’re ordering pizza for the fifth day in a row and haven’t seen your family or own bed in as many days? 

Choose carefully.  It’s going to be a long and arduous road together.

27 replies
  1. Anonymous
    Anonymous says:


    KPMG news is not surprising and that press release was not announced in our daily journal that is accessible via outlook firmwide. So that is odd. Why tell the press but not your employees?

    But again not surprising. KPMG is hemorraghing on the advisory side. IA jobs have dried up, IT work is having a tough time and even forensic and litigation group is hurting big time – no one is hiring and utilization is tanking. THERE IS NO WORK – PEOPLE ARE SITTING AROUND AIMLESSLY. Many believe that as mid-year evaluations come up further reductions no matter how they are classified will occurr by January.

    Don’t forget a minimum of 5% advisory wide were slashed earlier in the year…

  2. Edith Orenstein
    Edith Orenstein says:

    Can't wait to finally meet you at FEI CFRI next week! Very exciting to have you there, the first time we have extended a press invite to a blogger, well deserved!

    On your recommendation that people consider working for the SEC, I would second that, having worked there Dec. '99- Jan. '04. I am not sure what if any opportunities they have for new hires out of college, but they are inviting applications for their 2 year Professional Accounting Fellow (PAF) program, FEI posted some info about that here: and the application deadline is Jan. 16.

    See you at CFRI!

  3. Anonymous
    Anonymous says:

    This rings true…it will be interesting to see how and if Tim Flynn, Jack Taylor or if any of the Vice Chairs of audit, tax and advisory will address the troops come Monday or just let this sit…like a bad perogi on the plate.

    They didn’t previously but there was no newswire before so we’ll see…if I were to bet I’d bet against any “official” announcement or communication to rank and file…but upper management in the practices seemed to know this was coming and where it was hitting…

  4. Anonymous
    Anonymous says:

    At least it was more up-front than Deloitte’s — people at Green Dot are still reeling, apprehensive, and waiting for the next ax to fall (as it inevitably will). The initial gag order surrounding the Flanagan issue didn’t help things like employee morale and trust in leadership, either. (So, in other words, to the person asking “which Big4”, I’m advising “not D”!).

  5. Anonymous
    Anonymous says:

    Not really upfront…this was not KPMG issuing a press release – they responded to the reporter is how the article reads…so yes they admitted to it but only when they had to.

    Meanwhile all the large banks and i-banks are canceling their big x-mas parties but Uncle P. is still pushing ahead with these affairs…nice move boys!

    Like the person before said above…let’s see if they address it to rank and file on Monday…I doubt it too.

    KPMG will layoff more after the holidays – it’s a given.

  6. Anonymous
    Anonymous says:

    “Uncle P” would be KPMG or PwC? Someone should start a list of places where you don’t want to start your career. Deloitte would be first, and maybe KPMG can be second. Does anyone know whether there are any KPMG layoffs outside of audit or consulting (like in tax)?

  7. Anonymous
    Anonymous says:

    In a slowing economy, the professional services firm feel it immediately. The partners have the mentality that they can treat or mistreat the staff any way they like because their staff have no where to go. The people first mentality gets thrown out the door fast, and everyone’s true colors come out. Get ready to eat time or sit idle so that the partner can justify underquoting engagements.

    If you are in industry, get ready to do 3 person’s job at 1 person’s salary and still deliver.

    Government jobs do seem more desirable. It would be a good place to seek shelter until the bad economy recovers. Once it does, come back to the short-staffed public accounting or industry and don’t be shy about demanding your fair pay.

  8. Francine McKenna
    Francine McKenna says:


    Uncle “P” or “Pete” is K Peat Marwick G

    Can anyone name what the K and G stand for? I know but the first to comment gets a beverage of your choice next time I’m in your city.

  9. Edith Orenstein
    Edith Orenstein says:

    K is for Klynveld,
    G is for Goerdeler,
    if Wikipedia is right (always some risk there…) . I actually worked for Peat Marwick back when it was Peat, Marwick, Mitchell & Co. 1982-1984, the best mentor there was Bill Heller, partner in charge of the Private Bus Advisory Services practice they had at the time… (Cleveland, Ohio office).

  10. Francine McKenna
    Francine McKenna says:

    As always, you are correct and fast.
    I guess we are staying out later in NYC this week. Bring some stilettos.

  11. Anonymous
    Anonymous says:


    I am considering joining a Big 4 firm in the area of Transfer Pricing. Any thoughts on this area and how it will be affected by the coming recession? Thanks!!

  12. Anonymous
    Anonymous says:

    I really disagree that the firms do a good job at recruiting!
    To be honest, I got recruited in London, England and the process was for PwC:
    1. Math/verbal reasoning/personality test/diagramatic reasoning
    2. Group exercise (playing with lego or something in a group to see if you are a team player)
    3. Lunch to see if people that arent managers like you
    4. Interview with partner and manager asking structured questions such as “what would you do in x situation”

    the PwC usa recruiting system is as follows:
    1. get resume, see if GPA is 3.4 or higher, if 3.0 and you have significant activities eg captain of football team, thats ok, if you pass your resume directly to someone at a firm event and they like you it goes to top of pile
    2. Go to interview get asked questions like “give example of when you worked in a team” or “why audit”
    3. every student has been on same interview course so have the same answers to its hard to pick one student from the next…
    4. bring into office and have one interview with partner and manager who ask almost same questions as campus interview “why pwc” “why accounting” “give an example of a group project”

    So essentially PwC hires people that have no clue about 55 hour busy seasons, are able to do learned math eg solve a problem theyve seen before, but no ability to think outside box and consider all issues

    All USA accounting firms recruit in this arbitrary way, so yes a ton of people slip through the process with no critical thinking skills- any industry job asks finance situations gives a non text book example, the big 4 recruiting is a disaster, its so arbitrary- i know I used to do it!

  13. Anonymous
    Anonymous says:

    Update – no announcement or message from any leadership regarding the layoffs.

    The back channel chatter is that since it is 420 of 24,000 empolyees that its not a huge number in total terms and shouldn’t be cause for concern…I guess everyone is sitting in their bunkers…Francine – smoke out a comment from PR like you did wtih Deloitte.

    It would be interesting to know if partners at the Big 4 have or did forgo bonuses or large chunks of them given the market conditions – much like Deutsche Bank, Goldman…

  14. Anonymous
    Anonymous says:

    You recommend factoring into consideration a firm’s client list when making a decision about where to work.

    Is this public information or only the type of information procured during the interview process.

    I’ve been trying hard to find some sort of client list for various mid-size / regional accounting firms.

  15. Francine McKenna
    Francine McKenna says:


    It’s not impossible to get lists of audit clients for the firms. There is a reference guide, Who Audits Who, available in your library, but that works by knowing a company and looking up that way. Also there are various lists published on or via SEC filings that can tell you who audits who. Consulting is a little harder to come by. Press releases about won projects should be available i local business publications.

    If you are interviewing, I think it is fair game to ask who the firm’s clients are in the location or practice you are interviewing for. These are the firms and projects that you could be working on, whether audit or consulting. If they wont; tell you then they are not serious about you as a candidate. But it’s essential in knowing whether the firm has the kind of clients and enough of them to support you in your career.

    Ask the hard questions. Gauge the integrity and seriousness of the firm towards you by their answers.

  16. Anonymous
    Anonymous says:


    Some groups such as forensic and litigation practices will not tell a candidate specific client names due to confidentiality issues and that is reasonable and someone interviewing for such a group should understand that.

  17. Francine McKenna
    Francine McKenna says:


    Yes, of course, and that is understandable. M&A would be another practice where specific client info is highly confidential.

    The comment was really an encouragement to candidates to be aware of the firm's client base, based on publicly available information first. Secondarily questions during an interview that demonstrate interest in the specific market share, type of work, volume of work and approaches to assignment of work in a particular; practice and office are especially important right now. If an interviewer, especially if it's a recruiter instead of a client service professional, does not know or does not appreciate the need for candidates to know if there will be meaningful work, enough work, and where that work will be, then I think the candidate should judge accordingly.

  18. Anonymous
    Anonymous says:

    Rumor is that there have been significant layoffs at EY. It is interesting how the EY guys don’t blog about it. Not sure if these are rumors started by the other firms (or true).

  19. Anonymous
    Anonymous says:

    @8:16… the firms are partnerships unlike DB, GOldman, etc. Partners don’t get bonuses, they get their portion of profits.

    So while they reap the rewards in good times, they have all the downside risk during bad times (unlike management at banks which can pay themselves bonuses in good times and bad). Since the firms effectively pay out almost 100% of profits each year should a firm turn unprofitable in theory there would be minimal or no partner distributions. That’s why you see rush to cut headcount when the economy tanks. Unlike banks and public corporations which can pay out large bonuses, keep paying employees that the business doesn’t justify, and stick shareholders with the loses, in the case of a private partnership, management and the “shareholders” are the same, except management gets no salary. They are dependent on distributions from profits.

    So in a case where a firm turns as unprofitable as the banks currently are, partners would have no choice in terms of “forgoing” bonuses… they’d be receiving no distributions to begin with.

  20. Marie
    Marie says:

    If you are a job seeker looking to get client lists for mid-size firms, it is always fair game to ask interviewers.

    Places like Compliance week are good to start identifying audit clients, but even that can be deceptive given locations of clients.

    It is custom for the audit report in SEC filings to have the name of the firm and the office that audits it. So, when you see on Compliance Week/Who Audits Who that a company is audited by a firm, check their 10K to see which office audits them.

    Since firms like BDO and Grant (especially BDO) don’t have offices in a lot of mid-size cities, there are a lot of large clients audited by BDO and Grant offices in large cities. For example, BDO has a lot of clients in Pittsburgh, PA and in various cities in Ohio that are serviced by BDO’s Chicago office.

    Good luck.

  21. James
    James says:

    Speaking of public service:

    I wish I remembered the name of the man from the GAO I met at a Beta Alpha Psi event my chapter hosted in Hartford, CT and who said I should look them up after the Peace Corps. If you read this, get in touch!

  22. Anonymous
    Anonymous says:

    Large layoffs at EY however the employees and management are very quiet and hush hush about the whole process. More layoffs to come in the January and March timeframe.

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