Skip to main content

Posts

Showing posts from 2010

giving thanks

In the spirit of thanksgiving, I'd like to drink the kool-aid a bit and note the perks of working at a big 4 firm, perks that you can't get at most other companies -
a) Flexibility - If i wanted to, I could work from home unless i had a scheduled meeting somewhere or a commitment to be at a client. If i wanted to, i could "work" remotely, but be out at the golf course instead (Thank you, almighty blackberry). Granted, you won't get this your first few years at the firms, and you still need to put in the work (late nights to make up for the amount of time you slacked off), but a lot of ex-coworkers have expressed this lack of flexibility as the biggest intangible they miss. b) Recruiting - Yea, you can do this at every company. But because of the volume of college students we hire yearly (full time and internships), the opportunity to go back to college and participate in full fledged recruiting activities is something you have to appreciate. Looking at the changes…

audit rep

It's funny how perception/reputation is so important when it comes to scheduling. Don't get me wrong, I'm just as guilty working the gossip circles to try and find out the right team members to pick up. In a firm so big, your work in a team with one-two gossip hounds define you. They tell their friends who tell their friends who tell their friends. Next thing you know a minor mistake you make gets spun through the gossip world and that mistake turned into a story involving you lighting up these workpaper on fire. Audit reps are unfortunately important, because there is a lot of politicking in these firms. How do we tackle this? Sure, we can take the high road, work hard, and let our work speak for itself. I'd much rather prefer it that way.But scheduling is a game, and a lot of people love to talk up the amount of work they are doing. Can't stand it personally, but sadly, some people seem to buy it. Oh well, guess politics is part and parcel of the game in every en…

pwc ireland scandal

Okay folks,
I'm sure most of you have seen this by now, but if not, here's a good reminder to follow the Wall Street Journal Test, i.e. if you're not comfortable seeing an email sent through your work address printed on the front page of the wall street journal, don't send it.

The one I'm referring to (actual email and aftermath links) was one where a PWC Dublin guy ranked the top 10 most attractive entry level staffers and sent it to his co-workers. Look, it's funny, and if it's amongst your friends, that's fine, but make sure it never gets traced back to you, especially in this age. That's why you need to avoid using work email for stuff like this, especially in the current instant news environment.

audit culture

Can you comment a bit on the culture of the big 4s? I heard being a jock & drinking a lot is very important, especially in the first few years. Is this true? and what happens if the person's not a sports person or doesn't like to drink alot?

Not at all, it cannot even compare to the ibanking world. Just be yourself, and be social. Yes, I'd highly recommend socializing with your peers when you first start out, because it's a huge support system for you as you progress up the ladder. Drinking isn't really a factor, it's just an excuse to go out. I know plenty of people who go out and nurse 1-2 drinks the whole time. There's no real pressure from that perspective. Sports is just a topic of conversation in the conference room amongst the guys and the clients, but i'm sure you have enough interests outside of sports to keep a conversation going. Heck, half the big 4 is probably female, so there'll be more talk of television than of sports in the con…

Transition to banking

How easy/difficult is it to go from working in Audit at a big 4 firm to working for a P/E firm or to get into trading. Is this even possible? Would the easiest way to accomplish this be going into a fund accounting position and eventually leading into a different role?

Don't know much about the p/e field or trading, but I can go off of what I hear from my co-workers. It's very difficult to get into a P/E firm unless you went to a top 10/ivy league school or you have ibanking experience. Trading is much easier. Anyone can get into trading, as long as you know the right people. Ibanking is harder, not as hard as getting into P/E firms, but you can get into ibanking through public accounting, as long as you work towards other certifications (CFA,etc.) The key to get into ibanking is contacts, plain and simple. Fund accounting wouldn't really get you there unless you really differentiate yourself and make everyone aware that you're a superstar who needs to be put into their…

Travel

What is your average length of overnight travel for audit? Also how is this compared to consulting? What would you say is the percentage of time you are at 'out of town' clients?Audit: There a lot of factors that play a role in determining this. Some people never travel out of state, some people travel 5-6 months a year. Some people have 1-2 clients that involve traveling 2-3 weeks a year. Your position also plays a role in determining how much you travel. So if you're a staff associate, and you are on a client with a facility in Nebraska, you'd have to be with the team the whole time. If you're a manager and above, you'll go to Nebraska for 2-3 days tops. You could ask to get put on jobs that require travel, and if you have personal commitments at home (baby,etc.), you can ask to get put on clients where you don't have to travel much. Your request will not always be heeded, but the firms will try.
Consulting: Buy a carry-on, toiletries kit, etc. etc. becau…

Big 4 Hiring

I'm currently working for PwC and we are constantly getting emails about them raising the "finders" bonus for outside hiring. I don't know about the other big 4 but ever since the recession and the fact that they cut down hiring and people are leaving, we are now desperate for people! I would recommend applying ASAP. I'm in the Pittsburgh office but I know that from talking with our PwC people all offices are looking to hire external or from anywhere for that matter.
PWC is definitely increasing hiring across the board in all groups, more than the rest of the firms. But the other firms have also begun to advertise referral awards since the need for personnel in 1-2 groups have increased. Linkedin may be a good resource to find recruiter contacts for those interested.

Age in the big 4

"I have spent a few years in corporate and graduated from college 5 years ago. I have passed the FAR section of the CPA exam so far. My question is, what are the chances of me at 30 years old, getting into public accounting? I don't expect to get into the Big4 unless I was a recent graduate but will the public firms still look at my GPA?
This got me thinking about age. At 30, do you really want to get a job where you're going to be taking instructions from 23-29 year olds for your first five years? Can you deal with a busy season where you're going to be the one taking food orders every day? Recent college grads telling you to make copies for them? Easier said than done, no? If i was hiring for the big 4, i'd honestly shy away from people above a certain age for their sake. Don't get me wrong, age discrimination is illegal, and firms do hire older people at times, but I wouldn't recommend it. You might not fit in culture wise also since many of the activit…

External hires

have heard a few rumors that I was hoping you could clarify for me.
1) Big 4 firms do not hire on outside senior associates because they only recruit from their pool of staff associates.
2) Staff associates are only hired on straight of out college. So if you cant get an intern/job with a big 4 while you are in school, its too late to apply.
I am soon to have my CPA and CFE and also have 2+ years of audit experience with a small CPA firm. I have not applied to the Big 4 because of these rumors I've heard.

1) Big 4 firms definitely do hire people with prior experience in audit firms. But they obviously have not since the recession because they've laid off so many personnel internally. It really depends on the essence of economics, supply and demand. If the firms need more seniors because the turnover has been high, they will accept external applications. So it's definitely not too late to apply, especially around this time because the turnover rate is slowly going back to nor…

Service groups

I'm wondering if you could describe the work they do at Japanese/Chinese/French/etc Services Groups. (For example, the "Chinese Services Group" at Deloitte U.S.). Do they interact with other lines of services? What is the perception toward these groups within the firms?
These groups are always intriguing. Most people wonder WTF these groups do, and whether they are part of the audit practice. Then you get to understand that they do the same job, except it's on Companies based out of the respective foreign countries with operations in the US. Differences could include translation to IFRS from US GAAP,etc. Due to the number of people in these groups, they often pick up people in the regular audit practice to work with them on these audits. So for example, you can get to work with the French business group on a french sub-order if they need resources. From a perception perspective, it's not really that different. You are identified as a French Business Group member…

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…

all the rage

This link's making the rounds amidst the big 4, an animated depiction of a hypothetical conversation between an auditor and his boss.
Some people think it's the most hilarious thing ever, but i'd have to give it a 6 on a scale of 10. They could have taken this much further, but even though the concept was great, the content wasn't exactly must-watch tv.
Does it truly reflect conversations amongst auditors? Snippets, yes. Are there bosses like that? Yes. Are there subordinates like that? Yes. Is it very common? Not really, but not too far off.

post-compensation season

Looks like the firms have pulled off a heist. Although there's still the requisite complaining by the auditors, they are, for the most part, okay with their raises. In fact, the staff associates are happy with their raises. Since most firms, except for one, didn't even give out any raises last year, a raise in the high single digits or low double digits is actually something delightful to them, a call to their moms perhaps. Never mind the fact that they're getting paid one level below what they should be paid. The firms have essentially moved all pay grades one level below without too much discontent. And so the rumor mill comes to rest since the facts have come out, and as always, the firms escape, with very few scars.

expected work day

I will be working full-time as a staff auditor in the Fall for a mid-size firm in New York. I've interned at another mid-size firm, and I've seen all the auditors staying pretty late. But exactly what is late? (As an intern, I got to leave by 5-6pm). How late do they expect you to stay? Do you leave when the managers/partners leave?
As an intern, you have a pretty swell life. They will pet you, treat you and coddle you well, until you sign the dotted line. It is nothing like how you're treated once you join. This is prevalent in different industries though, not just accounting. Hours are different across firms and teams, so I can't tell you what you should expect, but I can only tell you what I've seen and heard. In the fall you might work until 7-7:30 at times. December's usually the slowest month of the year, so you can pull of a normal work day (5-5:30). On average during busy season (Jan-April), people work till 8-8:30. Some teams work till midnight, some w…

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 …

levels of leaving

Given the volume of people leaving the firms for greener pastures, I started thinking about the reasoning behind why people at different levels within the firm leave. So let's give this a shot...
1) First year associate - You go, WTF is this job? You realize that this is not the career or field, let alone the job, for you. You realize your calling is nursing, teaching in an elementary school, running a store, or something on those lines. This is when you leave, or should leave.
2) Second year-third year associate - You complete two years at the firm. You cannot deal with the hours, and your main priority is a good work-life balance. You'd rather be an accountant at a company, and have your own desk and 9-5 hours. This is when you leave, or should leave.
3) First senior associate year- You now have senior year under your belt. You probably have your CPA by now. The offers are pouring in. You hate the salary you're getting paid. You went through a really difficult year and star…

ratings and compensation season

And here we go....We're in that time of year when rumors are swirling about compensation increases and ratings. Some firms have already told their employees. Their friends at other firms hear the increases and then gossip with their peers. It then filters up and down the ranks. The speculation you hear is non-stop and is noise for the most part. I've heard ranges as low as 5% and as ridiculous as 25%. Gotta love the staff associates during these times. The funny thing is that the firms have lowered the bar so much last year than even a 5-8% raise for staff associates would make some of them happy. Have to give credit to the firms for successfully pulling off this heist. Ratings are another big discussion point at the firm. It's funny how people sometimes try to glean information about ratings without being too direct. For the most part, you hear complaints about how people get shafted by the ratings committees. The primary complaint is that the reviews don't reflect th…

transfers to other groups

"I wanted to know if it is possible to join a different business stream if you don't like audit after a year or so. For example are there opportunities to move into Consulting or Financial Advisory? Also how closely do you work with other business streams, and do you end up having good working knowledge of what exactly they do?"
Good questions. Question 1 - If you don't like audit after a year or so, you'll just join many of the disgruntled associates who end up staying in audit for some more time. The way it's set up, you can only really transfer into other non-audit groups after 4-5 years in audit. As far as consulting goes, consider Deloitte, since the other 3 firms spun off their consulting groups after the whole Enron scandal. The other groups have an implicit understanding with their audit brethren so they don't steal employees within a year or two after they join. Put the time in and you have a better shot. There are exceptions, and they'll try …

fee negotiations

Sorry for the hiatus, been busy at work. Wanted to link to a really good article in CFO Magazine, this was a link pointed out by a reader. Touches on what I blogged about earlier on budgets, and how Companies now have the upper hand in fee negotiations. This is just not right, and leads to partners cutting fees and costs to be somewhat profitable. The audit teams end up getting affected by this immensely. Not only are our raises not decent, but the budgeted hours we're given to complete audits is absolutely unrealistic. We also end up taking clients we have no business auditing, since the firms have certain basic standards and expectations of clients, and many startups just do not have the accounting staff to achieve and maintain these standards. This is just a downward spiral, and hopefully, for the sake of the firms, they will gain the upper hand in negotiations in the near future, and focus on actually doing a better job auditing in the near future.

Budgets

The competition amongst the firms are getting tougher, and I really don't like what it's doing to the auditing model. Firms are coming in and under-cutting other firms by offering the audit at half the price of the current audit fees charged by the existing firm. First off, there's a constant pressure on budgets, and the firms keep adding checklists after checklists and other necessary procedures to opine on an audit, effectively telling us to do more work in less time. Like the Wolf says in Pulp Fiction, "That's thirty minutes away, I'll be there in ten".


Secondly, given the lack of new clientele, firms are going in and undercutting each other like crazy. It's not like our budgets or our fees for that matter are too high. I mean, take a look at the invoices you pay your law firms. I don't hear any complaining there. Look, I like competition, I'm all for being efficient. But this industry isn't like a grocery store - we sell cheap, so shop…

Resident hard-ass

If you're sitting across the table from me, and I know you're fooling around on your blackberry or on gchat because you have a big ass smile on your face while auditing, (so you're definitely not working), and you do that for a decent amount of time, and I keep pushing you every half an hour, asking how the work is coming along, would I turn into someone you hate? Probably, but it's really annoying because team members should know that if they are slow, it slows the whole team down, and it precludes us from leaving at a decent time every day. Come on people, focus a little. I don't want to be here as much as you do.

Da boss, kinda

You know those times when the mgr leaves the room and the team quickly gets talking about non-work stuff and yaks and yaks until the mgr gets back. Being on the other side of the coin is a weird feeling. When you walk out, the room is dead quiet. As you're walking into the room, you'll interrupt a chatterfest that suddenly dies,with people staring at their screens again. So you think - a) Did i give them enough review notes that they now use me to gang up and bond and chat about - b) Do they feel much more relaxed now that I'm not in the room so they can use this opportunity to chat it up?

I'm hoping it's B, but oh well, might just give them additional review notes instead of doing it myself. As long as they're doing work, I don't care if they're using an image of me as a dartboard. Heck, teams need something to bond over, and it's always that one mgr/snr mgr/partner we use to yak about. Use me, as long as i see your signoff on a decent workpaper, I…

kentucky derby.

4:58 pm: normal office chatter, "busy" work day.

4:59 pm: Sudden rumbling..like the thunder in the background

5:00 pm: floor moves, sudden movement..employees head to the elevators like iron sticks to magnets

5:01 pm: Eerie quiet. You head out of the audit room only to see a football field of cubicles completely empty. How the heck did this happen? 3 minutes ago..the place was packed.



This 5:00 hurricane is a fascinating phenomenon. It's almost like people stare at the seconds hand in the clock, and once it hits 5..they head for the gates like horses at the kentucky derby.

Auditors are like the people standing near the derby gates..the dust from the track just falls on our faces, and we just sit there, shaking our heads. Yet, we head to the gates every day.

ADP/Payroll

Just realized that the very payroll/adp reports we all enjoyed looking at in order to see how much our client contacts made, now seem to piss me off. Especially when your main contact, who couldn't tell a debit from a credit, makes significantly more than you, and leaves at 5. It's almost guaranteed to get you in a foul mood and yak with your team about the ridiculous salaries that certain employees get when compared to yours.

Is EY in trouble?

Looks like EY's in a little trouble. I mean, auditors can sued by investors occassionally, and it usually ends up in a quick settlement and people move on. But this is Lehman, just off the heels off a pretty intense recession. I don't know enough to explain what happened, but Francine Mckenna provides the gist of the story here.Will be interesting to see how this affects the big 4

squeeze-out

"Can you explain the "forced ranking" system (e.g. GE style) that the Big 4 use to weed out employees. I'm about to join a Big 4 and want to know how to survive this."
Good question. There are really three factors that come into play here - a) CPA - This is huge. If you don't have it after 4 years at your firm, you're in the red zone. Try and get it out of the way as soon as you become eligible to take it. If you are not a good test taker, then it is even more imperative to begin the arduous process asap. If you are an audit superstar, but still don't have your CPA by this time, you're in danger. Why? Because it is a numbers game, and since firms have to cut a certain number, they just look at stats and don't look at each individual's particular scenario. b) Performance Reviews - Don't aim for an average rating. In this economy, it's not good enough. Yes, if people know you're good, you might end up getting put on horrendous cl…

scorsese

Ever seen those scorsese or spielberg movies, where everything in the background is accentuated to the nth degree, so you notice everything and anything around the main characters. It's kinda like that in audit rooms. We're barely a few feet from each other without any walls really separating us. So if one member may not be the most fit individual (or even a steroid head for that matter), their heavy breathing neeeever fades into the background. When you try and focus on some document, it's really quiet, all of a sudden..mmmmhphhhhhhhhhhhh...mmmmpppphhhhh. Totally throws you off, and now you're trying everything in the book to zone it out. If it's not heavy breathing, it's people who talk to themselves, make weird sounds, rumbling stomachs. I mean, everyone does it, but these audit rooms essentially end up acting like a microphone next to those sounds. Hey, i'm not being offensive or anything, I'm just saying...

experienced hire

"What's your take on experienced hires? I'm at a national mid-size, and once I have my designation I was hoping to move into the big 4. Is it pretty tough to get established, or even to get into a big 4 at the moment?"
Good question. In the past, after 3-4 years at a mid-size or boutique, you could get in since there was always a need for senior associates/managers. At this very moment, it's highly unlikely. HR will have to come up with a darn good reason for hiring people from outside the firm when they laid off people at the same level just a few months ago. Down the road, it's very likely. It also depends on the firm and the location though. If KPMG Chicago is way short of seniors right now for example, then you have a shot there. As far as transition goes, it's not that bad. It'll take a few months to get used to the different software applications, and i guess public companies since most publics have big 4 auditors. The biggest transition would o…

this is one bad audit room

This picture has been making the rounds...pretty sad. Even if it is a joke, it's not improbable..


leaving during busy season

And so it has begun...the attrition rate is slowly climbing. People ranking from senior managers down to staff associates are leaving, albeit in trickles.There are still a huge employee base remaining, and we're not gaining any new clients, so the firms still have some room before they get pressured into doing something drastic, like hiring "experienced hires". Short term, they're feeling the squeeze, since it is busy season and there's not much wiggle room when employees leave during this time period. (On a side note, HR turns into an angry divorcee that'll refuse to speak to you during the divorce process if you leave during busy season). But come the spring/summer, when the number of people "on the bench" (not assigned to clients) increases, that gives the firms more leeway to expend some expendables. Unless the attrition rate jumps back to normalcy, this will happen.
So for the sake of job security, here's hoping that happens.

client defense

You know when you're in high school, and the teacher singles you out or goes after you, but you can't say anything, or you'd get suspended or go to detention. That's how I feel when dealing with certain clients these days. How do i explain to them that calendar years can be different than fiscal years, when they're certain there's no difference? It's almost like any request my team asks them gets attacked. "Well we gave you everything you requested prior to the audit, so why do you need more?" Well, that isn't exactly how an audit works. And how about some of their excel schedules? Oh god, i mean..don't just give me an excel schedule and say that my answer's in there. If it takes more than 20 mins sifting through different unnamed tabs in the schedule to find the reconciliation i'm looking for, please take them back and make them look presentable. And don't go into fight club mode everytime we question your accounting. That jus…

partner salaries

So this link has been making the rounds amongst big 4 employees.

Here's an excerpt -
"The documents show that Ernst & Young partners had cash earnings averaging $565,000 for each partner in the 12 months ended June 30, 2002, up 9.7 percent from $515,000 the previous year, and that 31 percent of revenue was profit."

I'm assuming that it's a good ballpark figure for all 4 firms. Keep in mind that this was 2002, so it's obviously higher right now. Gotta love divorce proceedings for revealing everything. I'd say this is about what we expected the average partner to be pulling down. Makes it easy to buy those much needed country club memberships and vacation houses.

is this job really for you?

"I am interning now, in audit. I have never been so bored in my life. I am getting plenty of work, but the work seems so meaningless and unfullfilling. Tic, Tie, copy/paste in excel, check this, check that. It is all so boring and lacking substance. I realize that as an staff auditor, this is what you do, but is the essence of auditing really just that? Wondering if Advisory tax or risk management would be more to my liking.."

I hear ya loud and clear. I did feel like that too during my associate years at the firm. Here's the thing; as an intern/associate..you are going to be the bitch. All the tick and tie stuff, looking at invoices, footing numbers, making sure numbers in one doc are in an another, that's part of the job, sadly, an important aspect of the job. Is it meaningless? Our adjustments, usually in the scheme of things, are pretty meaningless. But our very existence is like a check on the companies, because they do not want to get caught committing fraud. W…

training week

Thought this question in the comments section was a good one to blog about - " What is training week like as a new associate like at a big 4 firm. I have heard some crazy party stories and was wondering if you could share your experience with us. I have also heard is lame with a bunch of "team building" exercises. I'm especially interested because I start next fall with a NYC big 4 firm in the fall and want to know what to expect."
My training weeks prior to officially starting work were my best weeks at the firm. Sad, isn't it. All downhill from there. We went off-site for an entire week, and that played a huge role in increasing the levels of debauchery. Think about it, a bunch of kids right out of college are put up in a hotel for an entire week, and we don't have to study in the evenings. It's a thing of beauty. If you're 21-23, your energy and tolerance levels are at an all time high. A huge group of us went out every single night, even pull…

interns

Thought I'd take a second to answer this question posted in the comments section - "how much work do u realistically expect an intern to get done?"
Well, if you can perform tasks that require common sense and logical thinking, that's good enough. We really don't expect you to dive into revenue recognition, and totally understand that interns have no prior audit knowledge since we've all started at the bottom of the audit pole. But when it comes to formatting something in excel, and performing other simple tasks like tying out numbers from one sheet to another, we'd expect you to do that, (as long as your seniors are half-decent at explaining tasks). If your senior can't explain how to fit a key into a lock, then it's on them.
Hope everyone's enjoying busy season so far!

insider trading

" U.S. accounting firm Deloitte & Touche LLP has won a lawsuit against a former top executive it accused of improperly trading in stocks and options of the firm's clients, including Motorola Inc and Best Buy Co Inc. A Delaware court sided with Deloitte in the case in an opinion dated Dec. 29, saying the former executive, Thomas Flanagan, had "obviously" been in violation of his employers' independence policies in making certain trades. Deloitte had sued Flanagan in Delaware Chancery Court in October 2008 for breach of fiduciary duty, fraud, and breach of contract, saying the 30-year partner who had risen to vice chairman of the firm had secretly hidden trades in shares of Deloitte's audit clients and lied about it to the firm. "Because an auditor sells, at base, its independence and integrity, the firm relies heavily on the purported honesty and independence of its professionals," Vice Chancellor John Noble, of the Delaware…