If it is true that we have “turned the corner” on the GFC, and firms now forecast significant growth over the next financial year, the case for junior employees to receive decent pay rises this year is ever stronger.  Promisingly, the AFR reported the following (2/7):

has your phone got one of these?

Big 4 accouting firm KPMG is moving to exploit opportunities in the advisory area by appointing two technology heavyweights….

KPMG national managing partner of advisory, Gary Wingrove said that within the advisory practice, performance and technology is currently recieving the big investment dollars to meet existing and future agreements. Its revenue grew by 3 per cent in the 2010 financial year, down from 14 per cent the year before. Double-digit growth is anticipated for the coming 12 months.

Yesterday KPMG finalised its annual staff performance review process with staff salary letters being distributed to audit staff. To call the contents of these letters a dissapointment would be an understatement. There was of course “market alignments” - but exactly what market are the adjustments aligning our salaries to??? Clearly not the market I am working in currently. And on top of that a second year of no bonuses - but don’t worry at least we haven’t had to get a pay cut like the Partners who are doing it tough - oh its hard life at the top!

An employee at KPMG was given his remuneration letter on Wed. Knowing that the new salary package was going to be crap he went to see one of the partners with his digital camera and recorded the conversation without the partner knowing of course. If you’re interested to hear it let me know!!

In late November last year we reported the rumour that PwC partners were facing a raft of draconian cost-cuts (in addition to those being levied against staff) in relation to the 2009 Partnership conference. An anonymous PwC spy told us at the time that partners were:

bunkered-down KPMG auditors yesterday

• opting to take a bus to the airport instead of taxis;
• flying economy instead of business class; and
• sharing bunk-bed style rooms at a budget hotel.

At the time, we speculated that the share-room set-up might prompt some partners to consider an impromptu after work game of Twister; something that could amount to a PR disaster for a firm with history in allegedly sexually harassing former employees.

Incredibly, it emerged over the weekend that rival Big4 accounting firm KPMG is allegedly currently applying very similar offensive cost-cuts at junior staff on a Queensland junket. We received the following comments from an anonymous KPMG spy on the weekend:

Whats up with the KPMG backpacker-style accomodation for audit staff? KPMG staff on a Queensland engagement have been told to share accomodation and grocery bills while working on an interstate engagement. The rationale for the decision is that expenses are not being picked up by the client, so KPMG doesn’t want to incur the usual costs associated with providing staff an acceptable standard while working away from home. The question is why is staying in a hotel an acceptable standard when a client is paying, but not when KPMG is paying? Is this a ploy to promote “male bonding” or just another case of being beaten by the tight a*se stick…

Or is it a case after-hours twister sprinkled with a little male tight-a*se stick bondage bonding? One thing is certain, it is likely not what disillusioned audit workers need to remain motivated to stay employed by KPMG when so many of their colleagues are apparently walking out the door.

Meanwhile, at the same time that the KPMG National Head of Audit Peter Nash had a brain explosion apparently sending all audit staff a picture he drew whilst thinking of ways to keep overworked staff tied to the firm (available here), came the following controversial comments from another anonymous KPMG spy:

I’m not sure if you guys have heard the brew-ha-ha in the papers about the RSPT in the past week.. I thought that it was interesting that KPMG was engaged by BOTH sides (the government and the miners) and came up with DIFFERENT conclusions depending on who was bankrolling them! Admittedly, they were two separate divisions but surely they should have some QA/Independence issue there.. or at least make sure they don’t appear to be in the pocket of their client! Way to maintain the brand, KPMG…

Yes we had heard of this remarkable story, but in the interest of keeping our noses out of the highly controversial current political landscape, we declined to investigate the issue more thoroughly. However… we have found it curious that none of the major media has to date joined the dots with Kevin Rudd’s former employement at KPMG and the curious way that the firm seems to be so successful in securing lucrative work from the federal government.

Perhaps KPMG and Krudd are in bunk-beds together?

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We reported last week the news that KPMG is in the midst of a major outflow of skilled workers, in particular from audit. Not to mention the very troubling loss of the MONTE CARLOS.

Today we build on that report with a leaked KPMG email sent to us from an anonymous KPMG audit employee who took time to include a stinging attack on partners (thanks for the great work!):

KPMG staff rest assured

The audit partners at KPMG just don’t get it:

• Salaries have barely increased in the last 2 years;
• Workloads have been on the increase; and
• We’ve been losing staff like crazy - 8 (all but one CA qualified) left our audit division last month alone, which only makes the workload for the rest of us higher.

Back in March one of the partners in charge of KPMG’s Sydney audit division sent out an email where he tried to placate staff by saying:

“you might know we are currently quite a few staff below budget but we are working hard on fixing this (see comment later)”.

That later comment was a commitment to hire more staff to lessen the workload. Most of the [“staff” hired] are secondees from overseas who… trickle in slowly or inexperienced cadets and grads who don’t start until July and December/January respectively:

“Our recruiting efforts to support you with more staff are bearing fruit. Several new secondees have already started or will very shortly. More are locked in for later in the year. The bulk of the new people are at the [Assistant Manager] level. We are also looking to next year’s graduates (starting Dec/Jan) and have a strong pipeline of candidates – we expect to recruit a few more than we did this year.”

Which would be fine, had he not also said this in that same email:

“We are getting many short term client secondment opportunities for all levels of staff so please let us know if you have a period where you are less busy in Retain and this might work. There are 230 free weeks in Retain before June 30 so certainly some of you have time available.”

230 weeks translates to 10% of standard hours, a figure that can only fall as staff quit and new work pops up. And this is outside of busy season! You can’t tell us that you recognise that workloads are too high and then tell us to work harder then in the same breath because 90% plus during the quiet times isn’t good enough. The partners just don’t get it.

If you want any more proof that the partners have gone bonkers then check out what Peter Nash, national head of audit at KPMG, sent all audit staff a few days ago in an email entitled “Maximum Assurance - something exciting is happening in audit”: http://img143.imageshack.us/img143/687/maximumassurance.jpg That’s it. No details. No explanation. No nothing. What are the smoking? The partners just don’t get it.

Has your utilisation sky-rocketed in the wake of fellow employee departures?

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It has been way too long since we’ve written anything about Big4 accounting firm KPMG. So let’s start with a tip-off we received a couple of weeks ago from an anonymous KPMG spy:

MONTE CARLOS GONE

heard about 15 people have quit from KPMG from a source in very recent times. I think mostly from Audit. Investigate

Investigate we did. And yes, following on from our report about departures in Advisory, KPMG Audit teams are apparently leaking staff like a sieve. We received this from an anonymous KPMG spy late last week:

KPMG (Melbourne) audit is literally wasting away. The stories you have been publishing about accounting firm employee losses are 100% true. The good news is that this time the employee losses are causing partners no end of concern. Does anyone remember the GFC? You know, when 200 KPMG employees were booted out?

Yes, we remember the GFC, and in particular we remember the preparedness of KPMG partners to shed staff to maintain their bottom line. Our heart now goes out to those partners left wondering how they will fill the newly vacated seats in Audit.

The following comments from another KPMG spy several weeks ago, we believe, sum up the sentiment of the firm and go some way to explaining how KPMG patners must respond to retain staff:

Dear Firm Spy Did you see the wopping big ad that KPMG ran in last Friday’s financial review paper bragging about how we won some Accounting firm award? What a huge waste of $$$$$$ when the firm has :

• made hundreds of people redundant;
• performance managed out hundreds more;
• frozen the pay of the poor slaves left working;
• *encouraged* us to take part paid so called voluntary leave and made us take weeks of extra leave at Xmas;
• banned training; and
• ditched fruit, cream biscuits and any other benefit that might cut into partner profits.

I wouldn’t have bothered to send this in to you if I hadn’t overheard an appalling conversation in the lobby cafe. Apparently the firm’s public relations department [stand to receive big bonuses] because they have “research” showing our clients don’t think we are the best [and the receipt of the award mentioned above] was [therefore] 100% thanks to [public affairs department].

I was already choking on my coffee at [the public relations department] saying KPMG won [the award] DESPITE the hard work of staff like me and my team but when one of the PR team told the others that they would all be getting really great bonuses as a result of the award I nearly fainted!!!!!!!!!!! How can they possibly deserve bonuses more than the people who have been doing the client work and who haven’t had a pay rise or a bonus or training for two years?

3 guesses if the accounting staff are going to get a bonus this year… Everyone I work with has already found an inhouse job or is interviewing now. Last one out turn off the lights.

It is little wonder that staff seem disillusioned, and expect little from their partners in salary-review season, when this is the treatment they receive in the “festive season”:

KPMG has gave staff one free day of annual leave this year for use during the office closure (which will eat up between 4 and 12 days of annual leave this year). Oh, and we received a $100 voucher. Gee thanks KPMG!

Is your firm cutting back on fruit? How about cream biscuits and training? Will there be a major exodus if partners don’t raise pay substantially on July 1?

Send the Firm Spy your news and views!

In recent weeks we have reported the rumour that Big4 accounting firms PwC and Deloitte are being crippled by a reported flood of employee departures. These departures, we speculated, are a result of the harsh working conditions these employees have confronted over the last 18 months.

And if the following comments of our anonymous KPMG spy are to be believed, the loss of valued workers might be an issue currently confronting all Big4 firms:

PwC have some sort of non-monetary award thing. Deloitte are reallocating their resources to make up for staff shortages. KPMG Advisory… is doing nothing to stop the haemorrhaging of employees. The market is picking up, and people are not satisfied with the way they’ve been treated over the past 18 months. They are not satisfied with the leadership, pay and the lack of recognition of work, and morale is at an all time low. The cream of the Advisory crop has already been reaped by Macquarie Group, and they can’t find replacement employees in some areas. The ones who are left try and pick up the slack, but this is not recognised, not even a word of ‘thanks’. There is a severe staff shortage, particularly amongst junior levels. Attempts to communicate the morale issues to the Partners have failed. They seem to live in an ivory tower, nicely protected by the ladder climbers who convince them that nothing is wrong.

Meanwhile, in a further update to our report on the major loss of workers from Deloitte’s tax group in Sydney, came the following scathing comments from an anonymous Deloitte spy:

It has been far too long since the Firm Spy has received anything from its (formerly very lively) KPMG spies. Nothing really substantial, in fact, since we broke news that the KPMG Poo Poll had received Royal Assent from the requisite 70% of staff. The upshot of this was that if “market conditions deteriorated significantly”, KPMG partners would have the option of placing staff on a leave of absence on 30% pay, among other things.

or the whole? … lets ask an audit partner!

Now, it appears KPMG partners have decided this deal was too generous. We received the following anonymous tip from a KPMG spy last night:

KPMG are offering “voluntary” work agreements over the christmas break. In effect, divisions which are still slow on work, have been encouraged to take leave under the same terms as the temporary work agreements, but you pick when you take the leave. Therefore, voluntary - and means PR wise, the firm never exercised it’s right to put people off on 30% pay. All the while other divisions are working overtime, and they refuse to allocate staff from other slow divisions, as even though there are staff doing nothing - this would allocate the income away from their cost centres. The staff in the busier divisions are disappearing at the hint of a better offer. Perhaps KPMG needs to be thinking about the whole more than the sum of its parts, especially while it’s falling to pieces.

Oh, we get it - if enough volunteers sign up for a Christmas “voluntary work agreement” - the old scheme of forcing people to take leave at 30% pay wont be invoked. Excellent number-crunching! … is a hoarded “good” banned KPMG audit partner responsible?

Send the Firm Spy your news and views!

It is a different kind of bickering emanating out of KPMG today. Usually we see employees lamenting their treatment at the hands of those superior to them, not those their equivalent. However, Firm Spy corporate bitching has been recast by the following sentiments received from an anonymous KPMG spy:

As a member of the KPMG Audit group - the group keeping the entire organisation above water - I find it difficult to digest the pay conditions levied against us… Im not alone in thinking that our pay reviews should be benchmarked against our performance in isolation, and not tied to how the firm travels more broadly… for example we should be paid more than tax and advisory…

Some of the more colourful comments have been edited. When harsh pay conditions and pay freezes are applied to an entire organisation, it is inevitable that some groups outperforming others will decry their remuneration and stigmatise the underperformers. But is it justified? Can anything less than fantastic employee remuneration be justified by the same Big4 accounting firm that:

• hoards ‘good’ banned employees;
• apparently saved $4,500,000.00 by reducing its graduate intake;
• is rumoured to force its staff to work ungodly hours; and
• implemented a laughable ‘Poo Poll’?

Send the Firm Spy your news and views!

In the current edition of BRW, KPMG national managing partner James Allt-Graham made the following comments:

We’ve gone to great lengths to hoard good staff… one of the realities in the medium term that we all recognised was that there’d continue to be an incredibly intense war for talent.

KPMG is the Great Southern Land

Are the three KPMG audit partners who were banned from auditing last week by the Companies Auditors and Liquidators Disciplinary Board some of the ‘good staff’ that KPMG has ‘gone to great lengths to hoard’?

Are these guys more worthy of being ‘hoarded’ by the firm than the hundreds of employees made redundant by KPMG in the last few months? Clearly the ‘war for talent’ wasn’t a major concern when the axe was swung in April and February.

It is disobliging, to say the least, that Mr Allt-Graham would impliedly characterise those now-redundant workers as not forming part of the ‘good staff’ worthy of being hoarded by KPMG. But to add insult to injury, Allt-Graham found it necessary in the same article to assert that partners (inlcuding, of course, the verboten audit partners) must be reumnerated well:

We need to strike an equitable split between what’s remunerated to partners and to staff… Partners are an important asset to the business and you don’t want to lose them. Corporations are able to use balance sheets to do that. No partnership can.

What else can corporations do, James? Let’s use Westpoint as an example!

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Three KPMG partners have been banned as registered auditors until at least mid-2010 following their involvement in the audit of the Westpoint group of companies.

where do you sit on the moral compass?

As reported by the AFR (18/8):

Brett Fullarton, Robert Kelly and Jonathon Robinson have agreed to be banned for 2 years, 18 months and nine months respectively, rather than face the alternative of having a hearing before the Companies Auditors and Liquidators Disciplinary Board.

Later in the article it is reported that KPMG national managing partner of audit Peter Nash said:

the three would remain in the audit division, where there was a range of work they could undertake for the firm, such as consulting or other accounting work.

Presumably they wont, therefore, simply continue auditing and have a fellow KPMG audit partner rubber stamp their work. The 4000 aggrieved Westpoint investors, each of whom is on average $90,000 lighter in the pocket, would be entitled to consider the bans as a hollow punishment in that case.

Justice served? Send the Firm Spy your news and views!

Despite the successful take-up of the Poo Poll ‘Temporary Work Arrangements’, huge redundancies over two waves, a tenancy reduction and a hiring freeze, KPMG has found it necessary to reduce graduate pay.

In the current edition of BRW, KPMG National Partner of People James Allt-Graham is quoted as saying that graduate

Do not pass go. Do not collect $2500.

had got to a point where it was quite high … This year’s [salary] offers are a couple of thousand dollars less than previous years.

This year KPMG has a total graduate intake of 378, a reduction of 18% on last year. That is a loss of 72 graduate positions across the country. Assuming graduates were paid $50,000 on average last year, and that new graduate salaries will be reduced by $2,500, then, according to our rudimentary calculations, this will net the partnership a saving of …

$4,545,000

Do KPMG partners have an unfair monopoly over all the cash?

Send the Firm Spy your news and views!