Professional Services Monitor: Today

From this morning’s press release:

Ernst & Young, one of the world’s leading professional services organisations, today announces the launch of a global Fraud Investigation & Dispute practice in response to the growing focus on, and complexity of, business fraud.
Christian Mouillon, Ernst & Young’s Global Vice Chair of Assurance and Advisory Business Services, said:
“Fraud is a growing concern for companies around the world because it is one of the only business risks that is deliberately disguised. Some estimates claim 5-6% of business revenue is being lost. Companies are looking for specialist help in this area on a truly global basis”.
The new practice will focus on helping global organizations navigate through the intricacies of corporate investigations and the complexities that may arise out of today’s regulatory environment. In particular the practice will focus on three areas: fraud investigation; dispute services; and providing forensic legal technology support.

Link: E&Y Press Release

Ernst & Young has posted a brief video of Tim Griffy, Americas Vice Chair of Quality & Risk Management, explaining what E&Y’s brand of “Quality in Everything We Do” means.

Quality in Everything We Do is more than our tagline. It’s a promise to deliver seamless, consistent, high-quality client service worldwide. Americas Quality & Risk Management Vice Chair Tim Griffy explains our commitment to quality and what that means for our culture, our people, and our clients.

Griffy explains the how quality connects with clients, financial markets, the profession and the firm’s employees. “Only by employing the highest quality people can we provide our clients with the best service.”
Such brand reinforcement is important for the Big Four. The nature of the profession means that some of the firms’ most important stakeholders are not directly involved with purchasing decisions. In our opinion, this makes establishing a strong brand as important as it is complicated. Firms ought to seek out all opportunities to proclaim what their brands mean.
Links: Ernst & Young’s Promise to Deliver Quality

In an interview with UK magazine Accountancy Age, John Connolly, Deloitte’s UK Managing Partner, says that the UK firm has set a goal for £2 billion in annual revenue within two years. Connolly also says Deloitte hopes to add 80 new partners in 2006.

“We have a range of ambitions and have always set ourselves challenging targets – delivering £2bn in two years is just one of our targets. Clearly, achieving this particular ambition will be dependent on continuing to deliver quality work to great clients and maintaining Deloitte culture – high performance in a totally supportive and consultative environment.”

If Deloitte were to make that goal, which would require annual growth rates of just over 20%, it would overtake PricewaterhouseCoopers as the largest firm in the United Kingdom. Currently, the Big Four in the UK rank in size PwC, Deloitte, KPMG and Ernst & Young, respectively. Connolly’s collegially competitive comments come after KPMG’s outgoing UK head Mike Rake said earlier this month that he expects KPMG to overtake Deloitte in size within the next few years. In a separate article, Accountancy Age looks at the Big Four’s UK numbers to see if Deloitte’s goal is attainable. They conclude that is. KPMG grew at 50% in 2005, E&Y’s first-half of fiscal 2006 grew at 21%, and Deloitte’s first-half of fiscal 2006 grew at 15%.
Internally, the Big Four are extremely competitive amongst themselves, watching each other’s performance very closely. It refreshing to see some of this competitiveness put out into the open in a constructive way. Connolly is publicly challenging his partners to perform at high level, and PwC’s partners along with them. And Accountancy Age seems happy to fan the flames a little.

Sharon Allen, Deloitte & Touche chairman, will be speaking this week at one of the country’s leading universities for accounting, the University of Illinois at Urbana-Champaign.

Her lecture is titled, “Leadership, Integrity and the Changing Business Environment.”
…
As the first woman chairman of a leading accounting firm, Allen has been named one of the “Top 50 Women to Watch” by The Wall Street Journal, one of the “Top 100 Most Influential” in accounting by Accounting Today magazine and an outstanding leader by the United Way of Greater Los Angeles.

Getting firm leadership out and speaking publicly, just as E&Y’s Jim Turley did in Detroit a few weeks ago, is essential for the profession.
Link: UIUC News Bureau

Deloitte’s Insights Podcast has released a new episode, Convergence in Action: Is a Mobile Virtual Network Operator Right for You?. From the show notes:

Some of the best examples of the convergence of cross-industry products and services have emerged in the wireless space. One example, the Mobile Virtual Network Operator (MVNO), can help companies extend their brands and generate new revenue streams. Listen and learn if an MVNO is right for you.

Deloitte & Touche partner Tony Kern and Deloitte Consulting partner Vince Shaw spend about 45 minutes discussing strategies in pushing products and brangs out of storefronts, across the airwaves, and into your mobile phone. What does that mean? Kern and Shaw cite non-telecom companies, such as 7-Eleven, reselling wireless airtime as basic example and one that’s been in play for more than decade. More advanced, from at least a technology standpoint, is media companies such as ESPN repackaging content for distribution onto handsets. To paraphrase Kern and Shaw, the driving purpose here is to have a presence in the increasing wireless lives and lifestyles. But, they say, this strategy may not be right for all or even most of companies. Particularly suited as consumer products, retail, media and financial services companies.
Link: Deloitte Insights Podcast, via iTunes

A few minutes after reading National City’s article on retiring boomers, I noticed that Ernst & Young’s Human Capital practice has released a survey on the same issue. The Aging of the U.S. Workforce: Employer Challenges and Responses finds while companies generally recognize the coming workforce shortfall, corporate America is largely avoiding the issue.

While almost two-thirds said that retirements will lead to a “brain drain” in their organization, less than one-quarter said that it is an issue that is strategically very important.
“Approximately every seven seconds in America this year, a boomer turns 60,” said William Arnone, an Employee Financial Services practice leader in the Human Capital Practice of Ernst & Young LLP. “Seventy percent of the survey respondents have not yet attempted to identify where business wisdom resides in their organization. This means one thing: corporate America is facing a significant wisdom withdrawal.”

Like the National City article, this survey does not directly address accounting and professional services. Seeing some demographics on the professional services workforce would be interesting.

Links: Ernst & Young Human Capital: The Aging of the U.S. Workforce: Employer Challenges and Responses

National City’s monthly newsletter, Insights, reports on the coming “boomer brain drain” as Baby Boomer’s begin retiring from the workforce.

With one-fifth of American workers reaching retirement age by 2020, an estimated 25 million people are poised to leave the workforce. The mass exodus will not only create a shortage of workers to fill jobs — one Bureau of Labor Statistics estimate put the shortfall at 2.3 million by 2014 — but it will precipitate a “boomer brain drain” that will be felt for decades.

The professional service industry will most certainly not be spared from this demographic and human resources challenge. The obvious problem is experience professionals leaving the firms. Less obvious is an issue related to me by a Big Four partner close to recruiting matters. A significant portion of accounting professors are also in this cohort with no replacement generation in sight.
The article also mentions an AARP listing of “Best Employers for Workers Over 50″. Looking at the list, not a single Big Four firm appears among the 2005 or 2004 honorees. Nor are there any other accounting firms on the list. Granted, the AARP honors just 50 companies and it doesn’t show whether any firms even applied for the list.
Links: National City Insights: The Retirement Age, AARP Best Employers for Workers Over 50 Honorees for 2005

In the past week, both PwC and E&Y have announced regional entrepreneurship awards. PwC, together with Entretec, presented NextAce with the third annual Entretec Entrepreneurship Award. This award “celebrates the entrepreneurial vigor and business achievements of technology companies based in Los Angeles and Orange County.” Ernst & Young is accepting nominations for its “Entrepreneur Of The Year(R) 2006 Awards in the Carolinas,” to be awarded in June. This award, given to recipients in North & South Carolina, “celebrates its 20th anniversary this year and continues to recognize the leaders and visionaries who are creating and building world-class businesses.”
Links: Lincoln Tribune: Ernst & Young Seeks Carolinas’ Preeminent Entrepreneurs; Nominations Now Being Accepted for the Ernst & Young Entrepreneur Of The Year(R) 2006 Award, NextAce Named Winner of Entretec/PricewaterhouseCoopers Third Annual Entrepreneurship Award

From the PwC/Lehigh press release:

BETHLEHEM, Pa.–(BUSINESS WIRE)–March 21, 2006–Lehigh University and PricewaterhouseCoopers LLP today announced the creation of the PwC Scholars program at Lehigh, a scholarship designed specifically for Lehigh’s Computer Science and Business (CSB) students.
The CSB program at Lehigh offers students an understanding of computer forensics and corporate risk management by integrating computing and business skills at an unprecedented level. Students in the program–the only such dually-accredited program in the nation–are simultaneously enrolled in both the College of Business and Economics and the P.C. Rossin College of Engineering and Applied Science, and earn a degree jointly awarded by the two colleges upon graduation.
“Lehigh is devoting attention to the widening gap between technology and business operations by cross-educating students in its computer and business curricula,” explained Griffith Welton, a partner at PricewaterhouseCoopers LLP. “With this program, Lehigh is addressing a significant need in the marketplace, which is why the competition to recruit these students is so high. They’re well educated and able to make an accelerated start in a career where information systems and business process skills are essential.”

This is interesting as it ties into comments made by Deloitte’s ERS leadership about the new competencies needed by professionals in the SarbOx 404 environment. Auditors, particularly those involved in internal audit and risk management, need cutting-edge skills in technology infrastructures and forensics.
Second, the profession needs to continue to partner with the educational system to ensure the professionals of tomorrow have the skills necessary. Not only is this good for PwC, but it is good for the Big Four as a whole.
It is also interesting that this program will have students interning not only in PwC’s New York offices as juniors, but also in Europe as sophomores.
Links: BusinessWire, PwC Global Careers
Related: Deloitte Insights Podcast: Internal Audit and Compliance: Life in the Sarbanes-Oxley Era

Effective March 13, 2006, KPMG has entered into an agreement with two Kuwaiti firms to create KPMG Safi Al Mutawa & Partners Co. Mike Rake, Chairman, KPMG International, made the announcement in Kuwait City this week.
“Our commitment towards Kuwait is based on our commitment to quality and professionalism, which we believe will be of immense benefit to the business community here,” Rake said. “Kuwait is critical to us and we are delighted to enter into this partnership with Safi and Rasheed.”
Links: Arab Times “Kuwait critical to us: Rake; KPMG formally launched”