Comments on: The Rest Of The Mess – Beyond The Big 4 http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/ The Business of the Big 4 Audit Firms Thu, 24 May 2012 01:48:07 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: re: The Auditors » Blog Archive » Hey Big 4! If I Were You, Here’s What I’d Do (Instead…) http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/comment-page-1/#comment-3669 re: The Auditors » Blog Archive » Hey Big 4! If I Were You, Here’s What I’d Do (Instead…) Mon, 13 Apr 2009 21:35:30 +0000 http://76.12.174.187/?p=843#comment-3669 [...] All of the Big 4 firms have had significant reductions in staff during the last 18 months, and especially the last 8-12 months.  The largest reductions seem to be at Deloitte and KPMG.  But significant cuts have occurred at EY and have been rumored  to have occurred, although couched in “performance only” language, at PwC.  Only KPMG and Deloitte have issued voluntary, anticipatory press releases for their “workforce resizing.”  But not recently.  PwC was forced to acknowledge some cuts last February due to reports here, but did so reluctantly and only after questioning by another publication. Their reductions have been mainly through attrition and forced ranking approaches that pushed employees to seek other opportunities involuntarily. These cuts have occurred in the US and outside the US. [...] [...] All of the Big 4 firms have had significant reductions in staff during the last 18 months, and especially the last 8-12 months.  The largest reductions seem to be at Deloitte and KPMG.  But significant cuts have occurred at EY and have been rumored  to have occurred, although couched in “performance only” language, at PwC.  Only KPMG and Deloitte have issued voluntary, anticipatory press releases for their “workforce resizing.”  But not recently.  PwC was forced to acknowledge some cuts last February due to reports here, but did so reluctantly and only after questioning by another publication. Their reductions have been mainly through attrition and forced ranking approaches that pushed employees to seek other opportunities involuntarily. These cuts have occurred in the US and outside the US. [...]

]]> By: Chicago Accountant http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/comment-page-1/#comment-1540 Chicago Accountant Tue, 25 Nov 2008 22:38:00 +0000 http://76.12.174.187/?p=843#comment-1540 Independent Accountant,<br/><br/>It's true that the Big Four have a large share of SEC registrants. However, if you look at the mid-majors, as I like to call them, they represent a sizeable chunk of revenue. I am talking about GT, RSM McGladrey, BDO, and to some extent Crowe. There's a few billion in revenue there. When did billion with a b become some trivial amount?<br/><br/>With that said, I don't care if Francine covers just the Big 4 or not. It's her blog; let her write about whatever she wants. Independent Accountant,

It’s true that the Big Four have a large share of SEC registrants. However, if you look at the mid-majors, as I like to call them, they represent a sizeable chunk of revenue. I am talking about GT, RSM McGladrey, BDO, and to some extent Crowe. There’s a few billion in revenue there. When did billion with a b become some trivial amount?

With that said, I don’t care if Francine covers just the Big 4 or not. It’s her blog; let her write about whatever she wants.

]]> By: Independent Accountant http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/comment-page-1/#comment-1536 Independent Accountant Tue, 25 Nov 2008 04:52:00 +0000 http://76.12.174.187/?p=843#comment-1536 Francine:<br/>I think your critics have no idea what market share the Big Four have of SEC registrants by market cap, about 98%! BDO, GT and McGladrey have about 1%, 1280 smaller firms about 1%. Why write about the Big Four? Because that's where the dollars are!<br/>Keep up the good work. Francine:
I think your critics have no idea what market share the Big Four have of SEC registrants by market cap, about 98%! BDO, GT and McGladrey have about 1%, 1280 smaller firms about 1%. Why write about the Big Four? Because that’s where the dollars are!
Keep up the good work.

]]> By: Steph http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/comment-page-1/#comment-1535 Steph Tue, 25 Nov 2008 04:13:00 +0000 http://76.12.174.187/?p=843#comment-1535 @8:24...<br/>You're exactly right. My SPECULATION (with absolutely no basis other than my imagination) is that in the unlikely event that BDO goes down, BDO international would sign on another mid-market firm immediately and have the current BDO folks join that firm. A new firm, say "BDO Virchow" or "BDO Plante" would effectively be a merged firm between current BDO Seidman and another mid-market firm such as Virchow Krause or Plante Moran. (Virchow and Plant just came to mind quickly, however it could be any of a number of firms).<br/><br/>I say "unlikely" event because the Bankest case was shaky and had a judge presiding over his first-ever civil trial. Bankest was a private company, so they are being sued by owners and investors, most of whom are currently in jail (most big litigation awards that survive appeal go to shareholders of publiic companies, which is not the case with Bankest). Keep in mind that Bankest has been going on for several years and that nothing will happen for another year or two. While it looks like BDO did a bad audit, it doesn't look like they were 100% at fault as the trial indicated.<br/><br/>Also, including Bankest, BDO has a relatively small amount of litigation outstanding. Keep in mind that all large firms have litigation over their heads and are one rogue judge or runaway jury from a serious headache, as evidenced by BDO now.<br/><br/>While this doesn't appear to be the forum for tort reform talk, a failed BDO could be the poster child auditor litigation reform. @8:24…
You’re exactly right. My SPECULATION (with absolutely no basis other than my imagination) is that in the unlikely event that BDO goes down, BDO international would sign on another mid-market firm immediately and have the current BDO folks join that firm. A new firm, say “BDO Virchow” or “BDO Plante” would effectively be a merged firm between current BDO Seidman and another mid-market firm such as Virchow Krause or Plante Moran. (Virchow and Plant just came to mind quickly, however it could be any of a number of firms).

I say “unlikely” event because the Bankest case was shaky and had a judge presiding over his first-ever civil trial. Bankest was a private company, so they are being sued by owners and investors, most of whom are currently in jail (most big litigation awards that survive appeal go to shareholders of publiic companies, which is not the case with Bankest). Keep in mind that Bankest has been going on for several years and that nothing will happen for another year or two. While it looks like BDO did a bad audit, it doesn’t look like they were 100% at fault as the trial indicated.

Also, including Bankest, BDO has a relatively small amount of litigation outstanding. Keep in mind that all large firms have litigation over their heads and are one rogue judge or runaway jury from a serious headache, as evidenced by BDO now.

While this doesn’t appear to be the forum for tort reform talk, a failed BDO could be the poster child auditor litigation reform.

]]> By: Anonymous http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/comment-page-1/#comment-1534 Anonymous Tue, 25 Nov 2008 02:24:00 +0000 http://76.12.174.187/?p=843#comment-1534 If BDO Seidman goes down it'll be interesting to see what impact it has on some of the large regionals. I have to assume BDO International would want to sign up one or more ASAP to fill the huge hole in its network. If BDO Seidman goes down it’ll be interesting to see what impact it has on some of the large regionals. I have to assume BDO International would want to sign up one or more ASAP to fill the huge hole in its network.

]]> By: trading http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/comment-page-1/#comment-1531 trading Mon, 24 Nov 2008 21:12:00 +0000 http://76.12.174.187/?p=843#comment-1531 GT had laid off 16 people from audit in Southern California in March. Socal consists of 4 offices with about 300 people in all 4. Audit is around 130 people. So it was a significant percentage. They cut intern numbers nearly in half but have kept new hires around the same. Why? Well they see new business prospects and they need to be staffed given these prospects turn into actual clients. It does not always work out. Socal has to be one of the worst considering they lost several mortgage banking clients who were huge, 2 of which i believe were over a $1million. That is large for Grant, most assignments are around 1/4 of that with some BAS going over 500k. GT had laid off 16 people from audit in Southern California in March. Socal consists of 4 offices with about 300 people in all 4. Audit is around 130 people. So it was a significant percentage. They cut intern numbers nearly in half but have kept new hires around the same. Why? Well they see new business prospects and they need to be staffed given these prospects turn into actual clients. It does not always work out. Socal has to be one of the worst considering they lost several mortgage banking clients who were huge, 2 of which i believe were over a $1million. That is large for Grant, most assignments are around 1/4 of that with some BAS going over 500k.

]]> By: Chicago Accountant http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/comment-page-1/#comment-1530 Chicago Accountant Mon, 24 Nov 2008 20:05:00 +0000 http://76.12.174.187/?p=843#comment-1530 I feel bad for the BDO folks. I feel really bad for the partners. Odds are that if you are an average employee at BDO, and the firm collapses, you have a good chance of getting a job at another firm. Many firms are running lean right now because they either laid people off or they didn't replace those who decided to leave.<br/><br/>If other firms pick up BDO clients, they will need people to staff those jobs. The partners on the other hand lose all the built up equity they had. That's pretty rough. The risk-reward for being a partner might not be there anymore. I feel bad for the BDO folks. I feel really bad for the partners. Odds are that if you are an average employee at BDO, and the firm collapses, you have a good chance of getting a job at another firm. Many firms are running lean right now because they either laid people off or they didn’t replace those who decided to leave.

If other firms pick up BDO clients, they will need people to staff those jobs. The partners on the other hand lose all the built up equity they had. That’s pretty rough. The risk-reward for being a partner might not be there anymore.

]]> By: Anonymous http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/comment-page-1/#comment-1529 Anonymous Mon, 24 Nov 2008 19:18:00 +0000 http://76.12.174.187/?p=843#comment-1529 BDO may get the damages knocked down on appeal but it is still a knife to the jugular.<br/><br/>Francine - can't wait to see the new layout and thanks for consolidating and putting up all the layoff posts in a new posts. Appreciate that and the info you collect and transmit here. Keep on, keeping on. BDO may get the damages knocked down on appeal but it is still a knife to the jugular.

Francine – can’t wait to see the new layout and thanks for consolidating and putting up all the layoff posts in a new posts. Appreciate that and the info you collect and transmit here. Keep on, keeping on.

]]> By: Anonymous http://retheauditors.com/2008/11/24/the-rest-of-the-mess-beyond-the-big-4/comment-page-1/#comment-1528 Anonymous Mon, 24 Nov 2008 17:58:00 +0000 http://76.12.174.187/?p=843#comment-1528 BDO is basically "Dead Man Walking". I don't know many of the facts of what went wrong for them. What is very unusual is that somehow the $521 million verdict has been set-aside pending the appeal. The chatter within the community is that BDO's goose has been cooked and that they will shut-down their practice at some point. That is a shame, but points out the risk of this business model called auditing. BDO is basically “Dead Man Walking”. I don’t know many of the facts of what went wrong for them. What is very unusual is that somehow the $521 million verdict has been set-aside pending the appeal. The chatter within the community is that BDO’s goose has been cooked and that they will shut-down their practice at some point. That is a shame, but points out the risk of this business model called auditing.

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