KPMG – The Big 4 Accounting Firms

KPMG Revenue 2016

big4accountingfirms — Thu, 15 Dec 2016 00:46:55 +0000

Big 4 Accounting Firm, KPMG, announced global revenues of $25.42 billion for their fiscal year ended September 30, 2016.

This is an increase of almost a billion dollars of revenue when compared to their $24.44 billion of revenues for 2015.

This represents a growth of about 8% in local currency terms and real growth of about 4%.

The mix of revenue was $10.12 billion in audit, $9.74 in advisory and $5.56 in tax.

Advisory had the most growth for KPMG. Advisory grew by 11.5% in 2016. Advisory grew from $9.1 billion in revenue in 2015 to $9.74 billion in 2016.

Revenue by Region

KPMG has 3 regions for measuring financial results. Those regions are EMA (Europe, the Middle East, and Africa), Americas and Asia.

KPMG’s best performing region was their Europe, Middle east, and Africa region. That region earned $11.34 billion.

The next largest region was the Americas region with $10.02 billion in revenue.

KPMG’s smallest region was the Asia Pacific region. This region brought in $4.06 billion.

KPMG’s Asia Pacific region saw the highest growth rate with a 9.8% growth rate.

The Americas had the second most growth with a growth rate of 9.6%.

KPMG Number of Employees

The Number of employees working at KPMG grew to 188,982 in 2016. This represents a growth of about 8.6% in headcount.

KMPG Partners

KPMG had 9,843 partners as of their fiscal year ended September 30, 2016. That is a growth of about 400 partners compared to the 9,445 KPMG partners in 2015.

KPMG professionals

The number of non-partner KPMG professionals grew from 134,064 to 147,028 in 2016.

Support staff grew from 30,456 to 32,111 in 2016.

KPMG people by region

KPMG’s EMA region has the most employees with 96,404 people. Their Americas region has the second most people with 54,111. Asia has the least number of employees with 38,467.

Other Big 4 Accounting Firms Revenue

Deloitte had revenues of $36.8 billion in 2016. This was real growth of about 4.5% and local currency growth of 9.5%.

PwC announced revenues of $35.9 billion for their fiscal year ended 2016. They only grew revenues by about $500 million from their 2015 revenue number of $35.4 billion.

EY had revenues of $29.6 billion in 2016. This is growth of almost one billion dollars from their revenue of $28.7 billion in 2015.

As you can see, KPMG lags behind all of their Big Four counterparts.

Other Big Four Accounting Firms Number of Employees

Deloitte had 244,400 employees as of their 2016 financial report. That was an increase from the 225,000 employees they had in 2015.

The number of employees working at PwC in 2016 was 223,000 versus 208,000 in 2015.

The number of employees working at EY in 2016 was 230,800. This was an increase from their 211,450 employees in 2015.

Conclusion

KPMG had a decent year in that they grew by about a billion dollars. They did not gain that much ground on the other big 4 accounting firms though. They did perform better than PwC with real dollar growth.

KPMG is going to need to be more aggressive to ever be able to compete with the other accounting firms on a true scale.

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KPMG PCAOB Inspection Report 2015

big4accountingfirms — Sat, 10 Dec 2016 21:00:12 +0000

The Public Company Accounting Oversight Board released the details of their 2015 inspection of KPMG on December 6, 2016.

The PCAOB found issues with 20 out of the 49 audits that they inspected.

Is that an improvement? You could say so because their fail rate in 2014 was over 50%. The problem is their 2015 rate is still close to a 40% fail rate. That is the worst rate for 2015 PCAOB inspection reports of the big 4 accounting firms.

That is a pretty steep rate when compared to Deloitte, EY and PwC whose inspection reports were released earlier this year.

Deloitte failed 13 audits out of 55. That represents a fail rate of about 24% which was an increase from 2014. Deloitte’s fail rate 21 % in 2014.

PwC was deficient in 12 of their 55 audits inspected by the PCAOB. That represents a fail rate of 22%. That is an improvement from PwC’s PCAOB Inspection Report fail rate of 29% from 2014.

Ey was deficient in 16 of their 55 audits inspected by the PCAOB. That represents a fail rate of 29%. That is an improvement from Ernst and Young’s PCAOB Inspection Report fail rate of 36% from 2014.

It seems like PwC and EY were the only Big 4 firm that had decreases in the fail rate of their PCAOB inspection report. I’m not counting KPMG because they have a tremendous fail rate.

Trend in Fail Rate from 2014 to 2015

Fail Rate as a Percentage of Audits Tested

Big 4 Audit Fail Rate

Fail Rate as a Percentage of PCAOB Inspected Audits

This is very odd since audit deficiencies for public companies decreased for the first time in five years in 2015.

The PCAOB found that 39% of all audits inspected were deficient in 2015. This is a decrease from 2014 of 43%. I don’t know about you but that seems insane to me. That means as a public company you have almost a 50/50 chance of failing your audit. That also means you are paying public accounting firms millions of dollars, but you might actually be getting nothing in return.

What was the problem with KPMG audits?

The PCAOB stated that in some of KPMG’s audits they did not obtain enough evidence to support the opinion that the financial statements were presented fairly.

The PCAOB caveated that statement though. They said that the financial statements of each respective company were not necessarily misstated just because KPMG did not obtain enough evidence.

Statistics from the PCAOB report

The PCAOB classifies KPMG’s failures into several categories.

Firstly they categorize whether KPMG failed due to deficiencies in testing the financial statements, controls or both financial statements and controls.

Of the 20 audits with deficiencies:

11 failed to adequately test controls and the financial statements.
3 failed only the financial statement audit.
6 failed only on the control audit.

The nature of the deficiencies was also further broken down into the type of failure.

14 audits failed to adequately test the design and/or operating effectiveness of controls that were selected.
8 audits failed to test controls over the accuracy and completeness of issuer-produced data or reports.
7 audits failed to perform substantive procedures to obtain sufficient evidence as a result of relying too heavily on controls. These failed because there deficiencies in controls testing that were detected.

Conclusion

That concept of having this many deficiencies is somewhat confusing to me. Imagine if 39% of all Starbucks cups were empty in 2015. Do you think Starbucks revenues would increase year over year?

The main difference is that Starbucks does not have a monopoly on coffee or liquid beverages.

The Big 4 Accounting Firms have a monopoly/oligopoly on financial statement audits though. That is how they can afford to fail audits at the rate they do.

Since I’m already perched on my soapbox, let’s delve a little deeper too. What is the purpose of the PCAOB? How do they consistently fail companies at a rate of 40% yet don’t take any severe initiatives.

They need to offer incentives for public accounting firms to get their audits right. In my mind that means they need to provide templates to accounting firms. They need to penalize them if they don’t use those templates as well.

I don’t want to hear how every company is different either. Every large company in the United States uses the same advisors. Large public companies all end up with roughly the same structure depending on the industry, so I don’t understand how the PCAOB can’t mandate use of certain workpapers and templates. Both the PCAOB and the Big 4 Accounting Firms need to take a long look in the mirror.

The Big 4 Accounting Firms either need to improve their audit work or lobby for the PCAOB to change its practices.

The PCAOB needs to change what they are doing. Even though there have been press releases saying that they are changing, I’m sure they will be underwhelming and confusing at the same time.

The PCAOB can’t just march out every year giving fail rates of 40% to all public accounting firms. It just sends the wrong message to society and the investment world.

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4 Reasons Why The Big 4 Should Produce The Sequel To The Accountant

big4accountingfirms — Mon, 31 Oct 2016 20:46:57 +0000

The Accountant ended in a way that left an opening for a sequel. There are numerous possibilities for the sequel if the production companies choose to create one.

According to Box Office Mojo the movie has made about $80 million globally on a production budget of $44 million.

That is about a 100% rate of return based on gross revenue. I think there is a strong chance that there will be a sequel especially after the upcoming Batman movies. Ben Affleck will want to cash in on his Batman popularity by making other movies.

Ben Affleck is probably the most expensive actor in the movie. The only other expensive characters that will have to be brought back are Anna Kendrick and possibly Jon Bernthal, so I think The Accountant 2 can be produced in a cost-effective manner.

If you want to learn who those characters are, make sure to check out our The Accountant Wiki page.

Let’s move onto what we came here to discuss. Why should the Big 4 produce the next Accountant movie.

1. I Think It Could Increase The Profitability Of The Film

The film did not highlight public accounting at all, so I think it could do even better if they featured the big 4 firms. The big 4 accounting firms employee almost one million people across the globe. If you featured the accountant working at a big 4 firm, you could tap into that huge pool of potential customers. Additionally all those public accountants also have families that they would drag to the films. Another benefit is that accountants are very well paid, so maybe they would purchase the tickets to the movie. They would also purchase the movie on iTunes, apple TV, android or amazon when it gets released to streaming services.

Check out our revenue posts to learn about how many employees work for each big 4 firm

Ernst & Young Number of Employees

PwC Number of Employees

Deloitte Number of Employees

2. Whichever Big 4 Public Accounting Firm Helped Produce The Movie Could Use It As A Recruiting Tool

All the big four firms have been trying desperately to recruit to millennials. Well why not produce a full blow movie about accounting to reach them. I feel like that would be one of the best ways to get recruits through the door. After watching The Accountant, I was pumped that I was an accountant. I think the big 4 could get a lot of young people to not only choose their firm, but they could also get high school students to explore going to college to major in accounting.

EY has been trying to market to millennials

KPMG pays for kids to go to college

PwC changed its dress code

Get your copy of The Accountant Movie today on Amazon.

So why doesn’t one of them get the biggest bang for the buck and produce a Hollywood movie about accounting? I think they should.

3. The firm that produced it could use it to improve their image

Lets face it – the big 4 accounting firms have been getting tons of heat lately:

Deloitte faced scrutiny over the Monsanto whistleblower

KPMG has been asked to answer for the Wells Fargo fraud

EY has had to settle with the SEC for getting too close to clients and for not detecting fraud at Weatherford

PwC settled a case where they faced a $5.5 billion judgment

Any one of these firms can use a huge publicity boost. All of the firms look like they aren’t doing their jobs. The public obviously expects them to spot fraud, and they are not accomplishing it. They can improve their image by having Ben Affleck’s character work at their firm and have him take down a bad client.

Let’s use the recent headline about KPMG not spotting the fraud at Wells Fargo as an example. You could have The Accountant work at KPMG on a big bank client. He finds that thousands of employees at the bank were directed by a corrupt CEO to defraud customers. He later finds out that the CEO is part of a huge criminal ring and blows him and his cronies away. BOOM!!! KPMG looks like a legit firm that tries to get rid of bad guys that are poisoning the public trust(even if that’s not true).

4. The Big 4 Firms Could Pool Together And Improve The Image Of Public Accounting At Large

As we stated above all the big firms have faced bad publicity. Why not pool together and help fund the sequel. They can create a fake big accounting firm in the film that The Accountant works for to improve all of their images. They can show public accounting in a positive light to promote more people to trust public accountants.

This could be their first test venture into Hollywood. If it goes well, then they can keep putting out tons of movies about accounting, taxes, and consulting. The big 4 firms already do this to some extent with the Center for Audit Quality. The center for audit quality is supposed to increase investor confidence in the big 4, but it hasn’t really accomplished this as evidenced by all the bad press. The governing board consists primarily of big 4 partners which shows that the big 4 have already partnered together to try to improve their public image.

Nasty Woman questions KPMG

big4accountingfirms — Sun, 30 Oct 2016 22:20:51 +0000

KPMG questioned over Wells Fargo Audit

KPMG has been asked to answer for their audits of Wells Fargo. Wells Fargo has been plastered all over the news for their fraudulent sales practices, and now KPMG has to answer for them. Wells Fargo has been a KPMG client for over 85 years.

They have been called by a group of senators to answer questions. The group of senators asking questions are:

Elizabeth Warren – Democrat Massachusetts (self-described nasty woman)
Bernie Sanders – Independent from Vermont
Mazie K. Hiron – Democrat from Hawaii
Edward J. Markey – Democrat from Massachusetts

Self-described “Nasty Woman”, Elizabeth Warren, questions KPMG over Wells Fargo audit

The group of senators are especially interested in the audits from 2011 to 2015. From 2011-2015 Wells Fargo was unable to detect fraudulent sales practices by thousands of their employees. Wells Fargo also recently settled with regulators over the creation of millions of fraudulent bank accounts and credit cards. They settled to the tune of $185 million over this fraudulent activity.

The senators also asked about the effectiveness of the Sarbanes Oxley act and the public company accounting oversight board (PCAOB).

The full list of questions asked by the senators are below.

Questions for KPMG about Wells Fargo

1) Was KPMG aware of any of the illegal sales practices committed by Wells Fargo employees from 2011-2015 and addressed in the CFPB Settlement?

If yes:

A. DId KPMG communicate this knowledge with top executives at Wells Fargo? If so, please provide electronic or paper copies of any and all communications.

B. Did KPMG have any internal discussions about Wells Fargo’s illegal sales practices and their potential impact on the company’s financial statements and on the outcome of the annual audits? If so, please provide all electronic or paper documents relating to these discussions.

If no:

A. Please provide a detailed explanation of why KPMG failed to contemporaneously identify or otherwise learn of Wells Fargo’s illegal activity during your audits.

B. Did you assess whether Wells Fargo had controls in place to prevent this illegal activity? What was your assessment about the quality of these controls and how well they were executed?

2) Did any employee of Wells Fargo mislead an employee of KPMG about the extent and impact of the unauthorized account creation addressed in the CFPB settlement during your audits?

3) Has KPMG conducted any internal reviews, reexaminations or reassessments of its Wells Fargo audits in light of the information revealed in the settlement?

4) Has KPMG faced any disciplinary action or queries from the Public Company Accounting Oversight Board in relation to your audits of Wells Fargo? If so, please provide details on these actions or queries.

5) Based on your present knowledge of the creation of unauthorized accounts at Wells Fargo, does your firm stand by its conclusions from 2011-2015 that “Wells Fargo maintained, in all material respects, effective internal control over financial reporting?”

KPMG has until November 28, 2016, to provide answers to these questions.

Conclusion

KPMG has a lot of questions to answer and will have to be careful about how they answer. They will want to be careful that they don’t send emails around that differ from the answers they give to congress. There is opportunity to perjure themselves.

They also have to be careful from an optics perspective. If they answer that they did not detect anything, then they will show that they were essentially clueless for the 4 years when this fraud was conducted.

There has been a lot of scrutiny over the big 4 accounting firms lately. EY has caught a lot of heat from the SEC, and now you have KPMG getting grilled by Elizabeth Warren.

The big 4 accounting firms have to be more diligent in their audits. Even if it is not necessarily within their scope to detect this stuff, it is the public’s expectation that they do. They need to start factoring it into their scoping procedures as well as their fees.

KPMG looks foolish in this situation which tarnishes their brand. The only way they should be willing to accept that going forward is to be compensated for it.

Let us know your thoughts in the comments below.

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Will KPMG pay for your Master’s Degree?

big4accountingfirms — Fri, 12 Aug 2016 19:26:02 +0000

KPMG is partnering with Villanova and Ohio State University to develop a masters of accounting that emphasizes data analytics. See the video below.

KPMG attributes the development of this program to the increasing use of data throughout the world. The program will try to utilize modern analytics technology.

25 students will enter the program for Villanova in 2017 at and 25 will enter the program at Ohio State’s Max Fisher College of Business in 2017.

KPMG developed a website strictly for this new program. KPMGMasters.com

It cites the fact that the world is more data-rich than ever as a reason for the program.

What will this curriculum be composed of?

Well according to KPMG’s website the curriculum will include the following:

Data Analysis and Visualization
Systems for Data Analytics
Auditing through Information Systems
Probability and Uncertainty and Statistical Decision Making
Auditing with KPMG Automated Audit Procedures
The Future of Data and Analytics
Data Mining for Business Intelligence
Fraudulent Financial Reporting

Big 4 Internships part 1

Learn what to expect during a big 4 internship. We make light of intern training and day 1 in the office.

Posted by Thebig4accountingfirms.com on Wednesday, August 17, 2016

KPMG caveats the curriculum saying that its up to the universities to come up with the final curriculum themselves.
The main benefit of the program is that KPMG will completely fund each student that is accepted into the program.

KPMG will also offer real-world experience during a 16 week (4 month) internship. Students will take part in this internship in the spring semester of 2018. Upon completion of the program the student would obviously have to accept a full time offer from KPMG in order to reap the financial benefits.

If the person becomes a high performer when they transition to KPMG, they have the ability to become an audit senior associate after only one year. They can also become an audit manager after only 4 years. This is a benefit for audit associates because it normally takes at least 2 years to become a senior associate. However, I’m not sure it is a benefit to those trying to become managers. Many of the other big 4 accounting firms already allow the opportunity to become a manager after four years if you are a high performer.

The data and analytics program will be offered in the following locations

Atlanta
Houston
San Francisco
Boston
Chicago
Columbus
Dallas
Los Angeles
Minneapolis
New York
Philadelphia
Short Hills
Silicon Valley
Washington DC

Check out our KPMG locations page for more information about each of these locations.

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Big 4 accounting firms revenue FY 2015

big4accountingfirms — Sat, 06 Aug 2016 18:26:18 +0000

We’ve updated our wiki pages for each firms revenue for the fiscal year 2015.

You can also check out the 2016 revenue numbers for the big 4 public accounting firms on the following pages

The big 4 accounting firms don’t release their revenue until the summer because they all have fiscal years that differ from December 31. The primary reason they have fiscal years in the summer is because they are busy auditing other companies during the December 31 fiscal year end time-frame.

The revenues for the big 4 accounting firms were as follows:

PwC 2015 revenue – $35.4 billion
Deloitte 2015 revenue – $35.2 billion
EY 2015 revenue – $28.7 billion
KPMG 2015 revenue – $24.4 billion

Fiscal Year 2015 results for the big 4 accounting firms

The revenue growth by firm was as follows:

EY 2015 revenue growth – 11.6 %
PwC 2015 revenue growth – 10%
KPMG 2015 revenue growth – 8.1%
Deloitte 2015 revenue growth – 7.6%

Ernst and Young’s revenue grew the most, but they are still well behind PwC and Deloitte in revenues. PwC grew the most between the top two firms which pushed them into first place as far as total revenue.

Growth of staff by firm was as follows

Deloitte’s headcount grew by 15%
EY’s head count increased by 12.3%
KPMG head count increased by 7.4%
PwC grew global head count by 6%

PwC obviously enjoyed the most revenue growth per employee because they did not increase headcount as much as the other firms did yet experienced great revenue growth. Deloitte added a significant amount of people without seeing a large impact in the topline. Deloitte obviously needs to have a firm townhall about charging codes. If people do not charge codes, then the firms do not make revenue.

PwC 2015 revenues

PwC leads the pack this year with $35.4 billion in revenue. The mix of revenue was:

$15.2 billion from assurance services
$11.2 billion from advisory services
$8.9 billion from tax services

Data from pwc.com

From this pie chart you can see that advisory is a large piece of the revenue puzzle now for PwC. Revenues increased overall by 10%. The growth in assurance was largely attributed to mandatory audit firm rotations in europe while the growth in advisory services was largely due to M&A deals and cyber security. The increase in tax revenues was attributable to M&A activity and transfer pricing demand. The transfer pricing demand was most likely due to an increase in global scrutiny around inter-company transactions.

Deloitte 2015 revenues

Deloitte came in second with $35.2 billion in revenues for the fiscal year ended May 31. This represents a 7.6% growth in revenue for Deloitte per their press release.

Deloitte went a different route than PwC in their press release. They chose to speak about investments in their business and society. They also chose to highlight how they have been able to attract and retain their talent.

The mix of revenue for Deloitte & Touche LLP was:

$12.2 billion from consulting
$9.8 billion from assurance services
$6.7 billion from tax & legal services
$3.5 billion from enterprise risk services
$3.1 billion from financial advisory

You can see that Deloitte blows PwC out of the water in all their consulting services, but PwC dwarfs Deloitte in audit revenue. PwC has been making a lot of acquisitions in the consulting space, so we will still have to wait and see if that pays off for PwC in the future.

This will most likely push PwC way ahead of Deloitte in a year when the economy is down. Consulting revenues dip in those years, so Deloitte’s revenues will sag while PwC’s audit revenues should remain stable as long as they don’t lose clients.

Ernst & Young 2015 revenue

Ernst and young LLP reported revenues of $28.7 billion for the fiscal year ending June 30, 2015. This represented an increase of 11.6% for EY which is pretty significant compared with prior years. The highest flying practice for Ernst & Young LLP was advisory services which grew by 17.6%.

The mix of revenue for Ernst & Young LLP was:

$11.4 billion from assurance services
$7.5 billion from tax
$7.3 billion from advisory services
$2.5 billion from transaction advisory services

KPMG 2015 revenue

KPMG’s revenue grew 8.1% to $24.4 billion for the fiscal year ending September 30, 2015.

The mix of revenue for KPMG LLP was:

$10 billion from assurance services
$9.1 billion from advisory services
$5.3 billion from tax services

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KPMG changes its recruiting process for millennials

big4accountingfirms — Thu, 04 Aug 2016 15:30:25 +0000

KPMG has streamlined their recruiting process in the UK for millennials. They condensed what used to be a 3 step process down into a one day process.

The reason KPMG changed this process is because of millennials. Millennials felt the process was too long and that communication during the interview process was poor.

How did KPMG arrive at this conclusion?

KPMG got feedback from a company called High Fliers Research that showed the poor stats with millennials.

KPMG cited the fact that competition is fierce for graduates for the reason as to why they changed this process.

I think this makes sense because KPMG was probably losing out on candidates because of a lengthy process that made no sense to millennials. It is also good for optics because KPMG is seen as listening to millennials. Oftentimes it’s good enough for employees to feel like they are being listened to to improve perception and morale.

Who is High Fliers Research?

High Fliers Research states that they interview graduates in the UK every year. They issue a report every year disclosing various stats about graduates.

The company polls 18,000 graduates every year. They have been doing this research for over twenty years.

High Fliers polled 400 people for the survey for KPMG.

Now KPMG is just implementing this in the UK for now, but it will be interesting to see if they carry this over.

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KPMG becomes the Brexit trailblazer

big4accountingfirms — Fri, 08 Jul 2016 02:39:15 +0000

KPMG just appointed a head of the Brexit.

In a recent press release, KPMG said that this leadership role will supplement the existing leadership roles which means that there isn’t a new person appointed to this position. KPMG appointed a partner already within the leadership structure to head up all the Brexit fallout. I believe this shows that KPMG takes this issue seriously but not serious enough to create a whole other branch in their leadership chain. I’m sure after more guidance comes out about Brexit, a different leadership structure might emerge.

They didn’t clearly state what she will be doing other than heading up their Brexit initiative. I’m guessing this means she’s in charge of coming up with projects to take to market, orchestrating webcasts and organizing what partners will be in charge of what pieces of the Brexit. She’ll most likely have to appoint heads of Brexit for each line of service that KPMG offers. Nothing tangible has really happened with Brexit yet either, so it will be interesting to see what “products” KPMG will offer other than just conference calls.

The partner appointed head of brexit for KPMG is Karen Briggs. Her profile on KPMG states that she is head of tax, pensions and legal services. Tax and legal services will obviously be the areas that see a lot of fallout from Brexit.

It seems her expertise has mainly been in regulatory and fraud investigations and not necessarily focused in international business. Her title as head of tax and legal services most likely got her this assignment.

KPMG is the first big 4 accounting firm to formally appoint a head of the Brexit. As the big 4 accounting firms typically copy each other, I’m sure PwC, Deloitte, and Ernst & Young will soon follow suit.

Brexit will no doubt result in many billing hours for the big 4 as clients want to have conference calls to discuss the potential implications from a trading, accounting, regulatory and tax perspective. I’m sure the big 4 might even come up with some unforeseen issues brought about by the Brexit in order to drum up new work.

Go here for the KPMG press release on the Brexit appointment:

KPMG Head of Brexit Announcement

KMPG also has a homepage that future Brexit news.

KPMG Brexit Landing Page

I checked the other Big 4 accounting firms webpages for brexit homepags and found the following:

PwC’s Brexit Landing Page

Deloitte’s Brexit Landing Page

It doesn’t appear that EY has a brexit landing page yet, but they do have a pdf.

Many newspapers and websites have written how this will increase work for accountants and lawyers. This will no doubt be similar to what happened with BEPs and all the OECD action items. Increased global regulation is now the norm versus the exception. Brexit will most likely increase regulatory requirements for clients that do business in the UK versus decrease it.

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KPMG using AI to audit

big4accountingfirms — Fri, 01 Jul 2016 03:01:05 +0000

KPMG is deepening their partnership with IBM Watson. This follows news earlier this year where the initial partnership was formed.

KPMG is focused on using the technology for audit and assurance support for now. They view that Watson is capable of this because auditing is mainly assessing large amounts of data for reasonableness. Computers are good at analyzing large amounts of data whereas humans are not.

Audits are based around sampling large populations. Computers could theoretically test a whole population in real time.

The main question that is asked when news like this comes about is – “Will the technology replace people?.” The answer is typically no because computers aren’t good at cognitive skills. IBM Watson is supposed to be cognitive and artificial intelligence. In the audit world this could easily replace people because a lot of high level audit work done by partners is typically based on simple tables prepared by staff.

If IBM Watson could compile the data and cognitively analyze it, why do I need a whole audit team? I’m not too sure.

I think auditors are going to have to start adding more value to clients other than populating checklists and determining testing samples because all that can be easily completed by high power cognitive computers like Watson.

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Culture at the Big 4

big4accountingfirms — Mon, 25 Apr 2016 03:00:20 +0000

Corporate Culture and Why Does It Matter?

There are 168 hours in a full 7 day week. Approximately 56 of those hours are spent sleeping/resting, 10+ hours are spent grooming and commuting which leaves 102 hours to be divided amongst work, family and friends.

How much of those 102 hours do you think is split between work and play? 50/50? The typical work week consists of 36 to 40 hours on the job. As a young business professional the reality is closer to 50 to 72 hours when you’re starting out your career. We spend more time with the people we work with and within the business environment than we do with our friends and families, let alone having some personal time to ourselves.

Analysis of time in a 7 day week

Do you want to spend time working at a place with bad culture?

If we’re spending that much time in the office, wouldn’t it be important to work in a place you feel good about? Somewhere where you fit and belong, a comfortable environment to learn, grow and build relationships. The core to finding this is to best understand the corporate culture.

What is Corporate Culture?

Corporate culture illustrates how the organization behaves as a group. It’s the unspoken understanding of the organization’s traditions, values, accepted norms and attitudes.

They are highly based on the Company’s unique Mission, Vision and Value Statements in which they all come together to build a Corporate Identity. Executives leverage these three components to develop direction and business strategies while most management decisions are influenced by them.

I’ve included a TED talk on company culture below to help you better understand the importance of company culture.

Ted Talk On Corporate Culture

The values are very well communicated to everyone throughout the business organization, setting clear expectations of roles and responsibilities.

During most Company’s orientation you will be introduced to the Core Values and you will see them over and over again in most dealings of the job.

Your annual goals and objectives will be structured around them, your annual performance review will be based on them and most importantly, every person within the organization will pick up the company’s practices based on them.

The Corporate Culture is the narrative of how people get things done.

The Big Four Differences

Each of the big four recruits and retains great talents from around the world. They all offer top-of-the line formal classroom trainings as well as on-the-job informal trainings. All four has impressive client lists and smart, knowledgeable professionals in which you will be able to work alongside and learn from.

If the Big Four is what you want, you cannot go wrong with any of them. They are all highly respected and a great start to your career. The work will be the same at whichever firm you select, however, the biggest difference is the culture in which you will work.

Our snapshot of each of the big 4 accounting firm’s Values and Cultures is detailed below. We highly suggest that you visit their websites and meet with their people for yourself to learn more and find your fit. Keep in mind that while every firm has their overarching values and culture, every location and even every specific work groups will have their own distinct culture.

This is why we cannot stress enough the importance of getting to know your local team and the group you are interested in working with directly.

PwC Values & Culture

PwC prides themselves on their people.

Throughout their website you see their Core Values of Teamwork, Excellence and Leadership presented in terms of what they do for their professionals.

They emphasize professional development, work/life flexibility and community. They believe in coaching their people with formal and informal mentors, real time feedback and a variety of career progression programs for every step of the way.

Not only do they offer the standard internships program for Juniors and Seniors, they also have several other discovery and exploration programs for freshmen through graduate students.

It doesn’t stop there. Once you begin your career with PwC, they offer an array of professional leadership programs ranging from milestone experiences to national and international rotation programs.

Outside Buzz

PwC has been recognized as the No. 1 Most Prestigious Accounting Firm and is known for being “the Best of the Best.”

Deloitte Values & Culture

Deloitte commits to adding value to the marketplace and their clients. They work towards having a competitive advantage in helping the capital markets operate more effectively by developing a strong reputation based on integrity.

Deloitte strives to strengthen their client relationships by promoting trust and leading solutions to business challenges and complex problems.

Deloitte believes in relentless leadership development by offering a state-of-the-art Deloitte University which has a bold commitment to their people and, ultimately, to our clients who will be better served by the transformative learning and leadership development that occurs there.

Outside Buzz

Deloitte is ranked the No. 1 accounting firm in the U.S. by annual revenue. They are known for their variety of client experiences with an emphasis towards consulting style work engagements.

Ernst and Young

Ernst & Young is all about getting everyone involved in a high-preforming team culture. They enthusiastically encourage every member of the team to contribute towards their global work force approach by reminding everyone that everyone’s opinion is valued.

E&Y’s leading people culture is seen in their commitment of inclusiveness, coaching development style and their engagement in each individual’s professional and personal aspirations. In return for your confirmations and ideas they are committed to giving their people the experiences needed to progress and develop in their careers.

Outside Buzz

E&Y has been ranked No. 3 for both Hiring Process & Client Interaction. When people think of E&Y they reflect on the relationships and the inclusive team building environment.

KPMG

KPMG upholds the highest level of professional standards and good business practices. Their deep foundations of trust, quality and collaboration helps drive progress and confidence in the capital markets and economy.

Their policy of open and honest communication builds trust and respect to each independent individual as well as within their working team and client relationships. KPMG continues to strengthens their reputation by leading with integrity and positive contributions to society as a whole.

A career at KPMG is an opportunity to build a global network of resources and experiences ranging from their Graduate Case Competitions to their competitive Global Internship Program.

Outside Buzz

KPMG has been ranked No. 2 in formal training and work place diversity. KPMG is a great firm with a large international presence

Bring it all together

As you get to know each of the Big Four, their people, their culture and their opportunities keep in mind each firm’s culture and try to see how its woven into their daily work environment.

If their values are in their people and/or team work, how is this reflected in available employee programs and/or work assignments? Is the hierarchy well defined or do the leaders see their roles as empowering and coaching their teams?

If their values are professionalism and client services, how is this shown in the professionals you have met and interacted with? How do they communicate with each other? What is the energy level, respect and openness with each other?

Most importantly, how does each firm’s value system align with your personal values and leadership style?

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