Skip to main content

how the financial turmoil is affecting the big 4

Wow. What a crazy market it's been the last couple weeks. Among the casualties..Lehman, Merrill and AIG. The Fed decides to bail out AIG, but not the stock holders. They then decide to ban short selling on financials. Now there are rumors that they're trying to help take distressed assets of company books. Unbelievable. Potentially a $1 trillion plan. Investing currently is not for the faint of heart. For those who haven't really been following what's going on, please do so. This is stuff for the ages.
Anyway, enough rambling. So how is this affecting the big 4? I had a conversation with some partners concerning this issue, and they believe that the big 4 are "recession-tolerant", not "recession-proof". Yes, clients are fighting back on the fees this year more than ever before. Yes, some clients are being swallowed up by the market and thus no longer exist. Yes, they're using this "crisis" as an excuse to offer lower raises than in years past. Yes, there have been layoffs in some of the big 4, most notably Deloitte. So how is it "recession-tolerant"?
Companies may be reeling, but they still need their financials to be audited. Heck, banks will probably want more conservative financials in order to provide financing to companies. According to one partner, VCs are sitting on lots of cash, or "dry powder", and thus start-ups shouldn't have much trouble finding financing. I'm not sure about that, but he probably knows more about me. Hiring might be lower than previous years, but hey, they're still hiring. All in all, it's a little rocky right now, but nothing compared to the financials sector. I'd still agree with the fact that a majority of us have pretty good job security.


Anonymous said…
For those of us that have offers now to start next fall, do you think we will be affected?
notfordisplay said…
Highly unlikely. Unless something unforeseen happens over the next year or so (stockholders sue auditors of the collapsed firms, etc.), you should be in good shape.
Tex said…
Big 4 do a lot past Audit and Tax (maybe not a lot in reltive money terms but a lot in # of services). Transaction advisory, business process advisory,etc.

Those other services will be effected. Combine this with the dramatic drop in demand for Sox services and it can be nervous time for folks outside of assurance or tax.
Anonymous said…
I can't speak for all of the firms, but the one I work for would never renig an offer from a graduating student for fear of ruining their reputation on campus and being "black-balled" at the university. It is more likely that they would lay off 2nd year associates than take back offers for incoming new hires. I think you're safe.
Anonymous said…
Can you comment on forensic accounting within the big four: what its like, compensation, exit opportunities?

notfordisplay said…
I honestly don't know much about that group in my firm. I know they've had layoffs recently. Their compensation is pretty similar to the audit profession. You travel a lot. Things are pretty slow right now in that field.
Krupo said…
Forensic depends on where you're located, and on who discovers there's fraud that needs investigating. Sometimes crazy-busy, sometimes as LoA/nfd puts it, not.
Anonymous said…
This is a GREAT site! I love it. Keep 'em coming!
Revisor said…
nice post, very informative now i know. thanks for posting!

Popular posts from this blog

auditing vs consulting

I was wondering if you could break down the career opportunities in auditing and consulting (in a big 4). I know that consulting pays more in a big 4 and has more interesting work, but it seems that auditing has extremely good exit opportunities (Financial controller, CFO etc). Any thoughts on which is better in the long run?

Well there's different consulting services offered by public accounting companies - the most popular being IT consulting and risk consulting. There are also other consulting services offered, but these two hire the most. Do they pay more? Yes, but not by much. Not enough for you to say: Shoot, the $$ is a huge reason for me to move over. Is the work more interesting than audit? Yes. You're actually looking over a company's processes and telling them what to do instead of what not to do (audit). Everyone I know who's made the switch likes it waay better than audit.
In the long run though, choosing audit vs consulting really depends on what you want t…

should you choose to audit financial services?

I'm trying to decide whether to audit financial services companies or non-financial services companies. What would you say are the pros and cons of either industries? Do individuals who choose non-FS have less career mobility within the firm or if they decide not to stay with the B4 after a few years?
Really depends on what you'd like to do after (unless you really love auditing). If you want to a controller,etc. at a p/e firm or a hedge fund down the road, you'd want to go into financial services. The pay won't be too bad, especially if you get a share of the insane bonuses they dole out. If you want to audit industries with tangible products and want to get a better understanding of the operations of such businesses, then other industries are the way to go.In terms of mobility outside the firm, auditing other industries is the way to go since you have plenty of options when you exit the audit world. For example, in 2008, after Lehman collapsed, it was incredibly hard …

Should I leave after 2 years as senior?

I'm currently working in KPMG Philippines, will about to start my fourth busy season and it'll be my second year as a supervisor/senior. I would like to know if it'll be a good idea to go work for a private company by this time. My only concern is that work outside audit may not be as enjoyable for me. However, I am starting to get tired of too much workload. 

At this point, stay until you get a year as manager under your belt and then leave. You could leave now and start as a senior accountant somewhere only if it's not a regular operational job where you'll do the same thing every time. Over the next few years, you'll pick up a lot of soft skills and technical skills that will be critical to your growth. If your only goal is a 9-5 workday and the money isn't all that important to you, then leave now, but if you can tolerate the workload for 3 more years, stay. It'll benefit you a lot long term.