You may have been cut from one of the audit firms in the past several months. You may still be working but feeling a bit insecure. The cuts have been well documented here. Regardless of how much the firms and their cheerleaders try to diminish the significance of any individual action they’ve taken, they all add up. A year ago I pitched a story to Public Radio International’s Marketplace about the cuts at the firms. It was right after the October bank failures and, yet, Deloitte was cutting as if their life depended on it. (Well, maybe it did. They lost a lot of business and has one of the stronger cases for “right-sizing.”)
The editor asked me how many people had been cut amongst the Big 4 and next tier firms in the U.S. Was it thousands like GM had just cut? Yes, I told her, but it would be hard to document. You see, I said, the audit firms do it in parcels and packets, dispersed so as to avoid the appearance of mass layoffs and maybe to avoid the requirement for notice under the WARN Act. Even the law firms are more transparent and at least they have the Wall Street Journal’s Law Blog to document the totals. The exceptions were the Deloitte August 2008 cuts and a small cut at KPMG (at this exact time last year) that were actually marked by press releases, one by default and one by design. Otherwise, there have been no other official announcements, no other press releases, no public admission of the cuts by the firms, and no real coverage by the mainstream media. Week before last was one of my most challenging in three years of authoring my blog. I leaked news of a planned Veterans Day 6-7% cut for PwC’s Advisory practice that ended up being accelerated because of my coverage. I have yet to see any stories in any mainstream media publication, even though this action speaks directly to PwC’s failed strategy for re-establishing their Advisory practice and throws into doubt the wisdom of their acquisition of BearingPoint’s Commercial practice (and ~800 professionals) a few months ago. Their retrenchment comes at the same time they’re exceptionally vulnerable given their litigation exposure from Satyam and Madoff-related claims, intense audit clients such as Goldman Sachs, AIG, JP Morgan Chase and Bank of America, not to mention Freddie Mac and consulting work for the Treasury’s TARP program.
This week I attended a program in NYC given by Directorship.com. The “Boardroom and the Media” panel included the CEO and the Chief Content Officer of Directorship.com, Carol Loomis, an Editor-at-large for Fortune magazine, and Becky Quick of CNBC. The conference tone was generally, “Let’s move on, the recession is over, the stock market is up.” There was a specific question to Ms. Loomis and Ms. Quick about the media’s focus on executive compensation. It seems people who serve on boards of directors don’t realize that unemployment is 10.2% and that professionals they rely on to provide advice and counsel (accountants and lawyers) are still reducing their ranks. When I introduced myself afterward, both Ms. Loomis and Ms. Quick were surprised but seemed pleased to learn about a blog focused on the business of the audit firms. I mentioned to Ms. Quick that significant job cuts by the audit firms had not been covered by the media. She figured out the problem very quickly: “But aren’t the auditors supposed to be our watchdogs? Don’t we need them more than ever right now?”
Let’s hope somebody wakes up soon and takes notice.