VEP: KMPG (Accounting) 2003 (Vault Employer Profile)

EMPLOY PROFILE VAULT EMPLOYER PROFILE:

KMPG

BY THE STAFF OF VAULT

© 2002 Vault Inc.

Copyright © 2002 by Vault Inc. All rights reserved. All information in this book is subject to change without notice. Vault makes no claims as to the accuracy and reliability of the information contained within and disclaims all warranties. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Vault Inc. Vault, the Vault logo, and “the insider career networkTM” are trademarks of Vault Inc. For information about permission to reproduce selections from this book, contact Vault Inc., 150 W22nd Street, New York, New York 10011, (212) 366–4212. Library of Congress CIP Data is available. ISBN 1–58131–231-8 Printed in the United States of America

KPMG

Table of Contents INTRODUCTION

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Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 KPMG at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

THE SCOOP

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History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

ORGANIZATION CEO's Bio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Business Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Key Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

VAULT NEWSWIRE

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OUR SURVEY SAYS

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GETTING HIRED

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Hiring Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 To Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Questions to Expect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Questions to Ask . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

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ON THE JOB

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A Day in the Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Job Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

FINAL ANALYSIS

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RECOMMENDED READING

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KPMG

Introduction Overview KPMG LLP is the U.S. member firm of KPMG International, the Big Four firm formed in 1987 with the merger of Peat Marwick International and Klynveld Main Goerdeler. The third largest professional services firm in terms of fiscal 2002 revenue, KPMG International provides auditing, tax, legal and financial advisory services from its offices in over 150 countries. In February 2001, KPMG LLP spun off KPMG Consulting in an IPO, but kept (and still has) a 20 percent stake in the publicly traded company, which, in October 2002, changed its name to BearingPoint in an effort to further distance itself from its former parent. Federal inquiries into possible conflicts of interest between professional firms' accounting and consulting units forced all of the Big Four firms to separate these units. And some, including the former KPMG Consulting and Deloitte Consulting (now called Braxton), opted to rebrand themselves. Late 2001 and early 2002 was a tough time for KPMG's corporate image, as it was for the accounting industry as a whole. In October 2001, the firm settled a lawsuit filed by the federal government regarding false Medicare and Medicaid claims filed by KPMG on behalf of several clients in the early 1990s. (KPMG denied any wrongdoing.) That same month, Xerox fired KPMG as its accountant of 30 years after KPMG had criticized Xerox's accounting practices. Also troubling was the revelation that Harvey Pitt, chairman of the Securities and Exchange Commission and a former lawyer who represented KPMG and other Big Four firms, met privately with KPMG's CEO while an investigation into Xerox's accounting was ongoing. Most of the fallout has affected Pitt, who met with executives from other companies under SEC scrutiny, and ultimately, was forced to resign in late 2002. A bright spot for KPMG in 2002 came at the expense of another big accountant's troubles. After Arthur Andersen was found guilty of obstructing justice in connection with Enron's bankruptcy, the remaining Big Five firms raced to pick up Andersen clients that had defected from the sinking company. According to The Wall Street Journal, by May 2002, KPMG had hired 133 former Andersen auditing clients, second only to Ernst & Young's 150 pick-ups.

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KPMG at a Glance Headquarters 345 Park Avenue New York, NY 10154 Phone: (212) 758-9700 www.kpmg.com

THE STATS Chairman and CEO: Eugene D. O'Kelly Employer Type: Private Company 2002 Revenue: $10.72 billion* 2001 Revenue: $3.4 billion** No. of Employees: 98,000* No. of Employees: 17,600** No. of Offices: 140*

UPPERS • Civic-minded firm • Flexible hours

DOWNERS • Low pay in accounting relative to other finance industries • Turnover and travel typical of big accounting firm

EMPLOYMENT CONTACT www.kpmgcareers.com

THE BUZZ

WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING

*KPMG International **KPMG LLP

DEPARTMENTS Assurance Financial Advisory Tax and Legal

• • • • • •

"Boring" "Highly respectable, well-known" "Very good" "Stodgy" "Accounting only" "Solid"

KEY COMPETITORS Deloitte & Touche Ernst & Young PricewaterhouseCoopers

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KPMG

The Scoop History The firm with many names As one might glean from the name KPMG, the assemblage of initials signifies a tangled, hybrid history. KPMG is the result of the 1987 merger of the accounting firm Peat, Marwick, Mitchell & Co. with international consortium Klynveld Main Goerdeler. Peat Marwick was founded in 1911, when William Peat, an accountant from London, bumped into James Marwick on a boat headed for America. Marwick had his own firm, Marwick, Mitchell & Co., which had been formed in New York in 1897. Peat and Marwick hit it off and decided to merge their firms in 1925 as Peat, Marwick, Mitchell & Co. In 1950 Peat, Marwick, Mitchell & Co. merged with the venerable firm Barrow, Wade, Guthrie, thus building its consulting practice. In 1978 the firm restructured its international practice as Peat Marwick International. The following year, a handful of European accounting firms led by Klynveld Kraayenhoff and Deutsche Treuhand discussed forming an international accounting federation. Casting around for an American member, the firms settled on two U.S. companies, and encouraged them to merge as Main Hurdman & Cranstoun. The consortium was then named Klynveld Main Goerdeler (KMG) after Klynveld Kraayenhoff, Main Hurdman & Cranstoun, and Deutsche Treuhand chairman Reinhard Goerdeler. KMG merged with Peat Marwick Goerdeler in 1987, forming the awkwardly named giant known as KPMG (KPMG Peat Marwick in the U.S.). In 1990 the firm began to consolidate its U.S. operations, cutting its professional staff, including partners. In addition, the firm suffered a series of high-profile lawsuits from clients who blamed KPMG for failing to notice accounting missteps. KPMG settled a suit originating from allegedly botched audits of S&Ls for $187 million in 1994. In 1998, the firm settled lawsuits with Orange County, California for $75 million, although KPMG did not admit any wrongdoing. Despite this uncomfortable litigation, KPMG has continued to grow in all areas. It has expanded its consulting arm organically and through acquisition. In 1996, the firm acquired a banking consultancy, Barefoot, Marrinan & Associates, and raided Deloitte & Touche for 26 new consultants in that same year. In fiscal 1997, KPMG's sales reached $9.2 billion, a 13.6 percent increase over the previous year. In October of that

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KPMG The Scoop

year, KPMG announced a tentative agreement to merge with fellow Big Five firm Ernst &Young, but the deal was called off four months later. In July 1998, the firm launched a giant $60 million worldwide advertising campaign. A creation of New York ad wizards Lowe & Partners/SMS, the campaign was KPMG's first major advertising campaign in its 101-year history. The campaign encompassed several media, from television to newspapers to placards at airports. By singing the praises of its own business rather than attacking that of its competitors, the promotional blitz represented a departure from the recent ads of other big accounting firms.

The consulting question Like other Big Five professional services firms in recent years, KPMG faced questions concerning its consulting unit. Regulatory agencies like the Securities and Exchange Commission (SEC) expressed concerns that firms offering both consulting and auditing services would be reluctant to issue critical audits and jeopardize lucrative consulting jobs. As a result, most of the Big Five agreed to look at ways to separate their auditing and consulting practices. In August 1999, KPMG announced a partnership with networking systems maker Cisco Systems. Cisco bought approximately 20 percent of KPMG Consulting, and the two firms put their heads together to develop client solutions. As early as January 2000, KPMG began considering a public offering of its consulting arm. The firm finally got up the nerve to file in May 2000, but market conditions delayed the offering until February 2001. And even that offering date looked doubtful until virtually the last minute due to continued market troubles. Additionally, the IPO was scheduled at a time when Cisco was preparing to announce poor results, which analysts predicted would dampen investor enthusiasm for KPMG Consulting. "It's not even a question of KPMG wanting to brave the market - it's really a question of the underwriting group wanting to brave it also," Ward Morgenthau of Laidlaw Global Securities told Business Day (Thailand). Both groups ultimately swallowed their reservations and completed the IPO, which was worth over $2 billion. KPMG still owns approximately 20 percent of KPMG Consulting, while long-time partner Cisco owns 10 percent.

The year of living scandalously Late 2001 and early 2002 was a tough time for KPMG's corporate image. In October 2001, KPMG agreed to pay the federal government $9 million to

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settle a lawsuit alleging that the firm helped the largest for-profit hospital chain cheat Medicare and Medicaid out of millions of dollars. The Justice Department claimed that KPMG submitted "false, exaggerated or ineligible" claims on behalf of Columbia/HCA Healthcare Corp. between 1990 and 1992. George Ledwith, a spokesman for KPMG, told The Wall Street Journal: "We've agreed to settle in order to avoid the cost of litigation and put this decade-old matter behind us, and we vigorously deny that we engaged in any wrongdoing." Columbia/HCA Healthcare Corp (now known as HCA-The Healthcare Co.) agreed to pay the federal government $840 million as part of its own Medicare-fraud settlement in 2000. In October 2001, a 30-year relationship came to a bitter end. Xerox, an auditing client of KPMG's for three decades, fired the accounting firm as its auditor. The break-up occurred after KPMG had criticized Xerox for its shady accounting practices. An SEC filing announcing the firing revealed that KPMG found "material weaknesses in the company's internal control systems," as well as a failure by Xerox management to set "the appropriate tone with respect to financial reporting." In 2000 Xerox disclosed accounting irregularities in Mexico, sparking an SEC probe. KPMG refused to approve Xerox's 2000 results without a lengthy review. As a result, in June 2001, Xerox restated its financial results of the previous three years. Xerox acknowledged it had "misapplied" accounting rules in a variety of ways, including improperly using a $100 million reserve to offset unrelated expenses, and changes in accounting "estimates" that boosted pretax income by approximately $845. Xerox denied any wrongdoing, saying it made the disclosures because of increased investor interest in its numbers. A KPMG spokesman told the Journal the firm was "sorry to see a more than 30-year relationship" with Xerox end, adding that KPMG had been working "closely with Xerox to try to further address issues raised by our audit and the [board's] investigation and were continuing to do so when we were terminated." By early April 2002, the Xerox-related problems still hadn't gone away. After Xerox agreed to pay a $10 million civil penalty and restate its books back to 1997 to settle SEC charges, KPMG was informed that the SEC planned to file civil charges against them as well. Also in 2002, the SEC censured KPMG after discovering that the firm had improperly invested in a mutual fund operated by a company it had audited, thus breaking rules requiring auditors to be independent of the firms they audit. Although the SEC censured the firm, the commission didn't impose a monetary fine on KPMG. "The SEC's decision to censure KPMG reflects the seriousness with which the SEC treats violations of the auditor independence rule, even in the absence of demonstrated investor harm or deliberate Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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KPMG The Scoop

misconduct," said Stephen Cutler, head of the SEC enforcement division. KPMG didn't admit to any wrongdoing. A KPMG spokesman told The Washington Post that the firm made the investment inadvertently "in we thought was a mutual fund sponsored by … a non-audit client."

New kid on the block In April 2002, KPMG's board named Eugene Mr. O'Kelly the firm's new CEO. O'Kelly took over the CEO duties immediately, succeeding Stephen G. Butler, who had indicated in late 2001 that he would be stepping down in 2002. Typically, KPMG's board would have waited until its annual partners meeting in the fall to announce the succession, but it decided to make the announcement early due to the allegations of misconduct swirling in the industry. Upon the announcement, O'Kelly said the change in the timing of the successions was in part a result of Arthur Andersen's crumbling, and KPMG picking some of its pieces. "We are not only in the process of adding their clients, but also adding their people," O'Kelly said. Previously, O'Kelly was the vice chairman of KPMG's financial services unit, the firm's largest line of business.

Inauspicious beginning? It didn't take long for new KPMG CEO Eugene O'Kelly to find himself in the middle of a scandal. Soon after taking over the CEO post, O'Kelly requested a "meet and greet" session with Harvey Pitt, the chairman of the Securities and Exchange Commission and a former lawyer who had represented KPMG and other Big Four firms. Pitt and O'Kelly met on April 26, 2002 in the midst of an ongoing SEC investigation into Xerox and its former auditor -- none other than KPMG. After the meeting, O'Kelly said in an email to KPMG employees that he had discussed the SEC's investigation of the Xerox audits and had told Pitt that the SEC should not take action against the accounting firm. Pitt, though, denied ever having any discussion about Xerox or KPMG's involvement in the investigation. Because Pitt had represented KPMG as a lawyer before working for the SEC, any discussion of the case with O'Kelly would raise a conflict-of-interest question. O'Kelly later clarified the details of the meeting. In a letter to lawmakers, O'Kelly said, "No client or former client was mentioned by name," in the meeting with Pitt. O'Kelly did admit that he briefly referenced "a pending matter," but said he did not do so by name. Following the discrepancies in the accounts of the meetings, some congressional Democrats began calling for Pitt's resignation. Pitt was able to 6

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KPMG The Scoop

stave off the heat for a few months, but he ultimately went up in flames. In November 2002, Pitt was forced to resign after he failed to alert fellow SEC commissioners that former FBI Director William Webster, who was chosen to head a new accounting oversight board, had been chairman of the audit committee of a company under SEC investigation.

Compensation Pay Analyst/Auditor(1st year): $30,000-40,000 Consultant (1st year): $50,000- $75,000 Tax (1st year): $40,000-50,000 Bonuses may range between $3,000-$10,000

Perks • 20-25 personal days • Flexible Work Program • Personal Assistance Program ·• Lifeworks child care, adoption, education, disability, and elder care resource and referral service • Up to $2,500 in adoption costs, plus up to $2,500 for birth mother medical expenses • $1,500 bonus for passing the CPA exam within first year of employment in entry-level Client Service positions; $750 bonus for passing within second year; $750 for passing within first year for non-entry level employees • Bonus for passing each part of the property/casualty exam, up to $20,000 • Bonus for passing each part of the life/health exam, up to $6500 for attaining an Associateship (ASA) and up to $13,500 for attaining a Fellowship (FSA) • METPAY discounted auto and homeowner's insurance program • ConSern educational loan assistance program

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KPMG The Scoop

• Mortgage Assistance Program • 10 percent tuition discount for children of KPMG employees at Children's World Learning Centers, Childtime Childcare, La Petit Academy, and Children's Discovery Centers • Up to $5,000 in dependent care reimbursement • Choice of health care plans for employee and eligible dependents • Dental plan for employee and eligible dependents • Vision One Discount Program • Up to $3,000 for health care reimbursement • 401(k) • Incentive Compensation Program • Disability and Illness Benefits • Life Insurance • Disaster Relief Fund • Matching Gift Program

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KPMG

Organization CEO’s Bio KPMG LLP CEO: Eugene O'Kelly The vet Eugene O'Kelly is a 30-year veteran of KPMG. After getting his B.S. from Penn State and his MBA from Stanford, O'Kelly joined KPMG's San Francisco office in 1972. Ten years later, he was admitted into the KPMG partnership. In 1988 O'Kelly was named managing partner of the Palo Alto office, and in 1994 he became the national director of KPMG's banking area. In 1998 he took over as vice chairman of financial services, a position he held until April 2002, when he was elected CEO. With the majority of his career coming in the financial services sector, O'Kelly has serviced some of the biggest names in banking, including Citigroup, J.P. Morgan Chase and Wells Fargo.

Business Units The firm offers assurance, financial advisory and tax services in five different industry areas: financial services; health care & public sector; consumer markets; industrial markets; and information, communications and entertainment.

Services Assurance: In addition to standard auditing of clients' financial operations, KPMG dispenses advice on a variety of business dealings. Professionals in the division provide assistance in valuations, buy-out arrangements, and evaluation of key financial information. Accountancy and auditing services are also available to act as counsel and/or intermediary for clients in relations with other businesses. The Assurance unit accounted for $6.3 billion of KPMG International's total sales in fiscal 2002. Tax and Legal: KPMG's goal in this department is simply "to ensure that each client pays no more tax than the law requires." This is accomplished through careful individual and corporate tax planning, diagnostic reviews, and the development of new and innovative strategies. Tax experts strive to stay abreast of new laws and other developments, both within the U.S. and

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KPMG Organization

internationally, to maintain optimal compliance. In fiscal 2002, KPMG International generated $3.0 billion in tax and legal services revenue. Financial Advisory: From the initial offer to negotiations to deal agreements, the firm assists corporate clients on all facets of mergers, acquisitions, and other major transactions. In conjunction with other divisions, financial advisory services can also help clients ease the oftencomplicated post-deal integration. KPMG is also skilled at offering guidance on the best ways to raise funds for companies interested in making an acquisition. KPMG International's financial advisory unit accounted for $1.4 billion in total revenue for fiscal 2002.

Industry Areas Financial Services: Financial services caters to over 12,000 financial institutions. Employees in financial services help their clients in banking (the firm's largest industry practice), insurance, and real estate adapt to changes in financial markets and conditions. This line also provides consulting, investment management, and regulatory services. Health Care & Public Sector: Health care employees work with hospitals, medical research facilities, biotech groups, pharmaceutical companies and other medical organizations, dealing with economic and regulatory trends. KPMG has been active in the public sector since its inception a century ago. The Public Sector line seeks to "re-invent" government for the 21st century, revamping federal and state agencies and institutions to provide more value at less cost. Industrial Markets: The line is divided into four segments: Industrial and Automotive Products; Chemicals and Pharmaceuticals; Energy, Power and Nature Resources; and Transportation. Consumer Markets: This unit is further divided into three segments: Consumer Products; Retail; and Food and Beverage. Information, Communications, & Entertainment: Information, Communications & Entertainment (ICE) professionals surf the wild information wave, advising a diverse customer base that includes broadcasting and entertainment companies, publishing firms, and the semiconductor, software and computer industries. ICE divides its consulting services into five areas: Strategy and Financial Management, Performance Improvement, Technology Services, Tax, and Audit/Assurance.

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KPMG Organization

Locations The most geographically dispersed of the Big Four firms, KPMG has a global network consisting of offices in over 150 countries. The firm is headquartered in New York City.

Key Officers Chairman and CEO, KPMG LLP: Eugene D. O' Kelly Deputy Chairman, KPMG LLP: Jeffrey Stein Chairman, KPMG International and KPMG UK: Mike Rake CEO, KPMG International: Robert W. Alspaugh COO, KPMG International: Colin Holland CFO, KPMG International: Joseph E. Heintz

Ownership KPMG LLP is fully owned by its partners.

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KPMG

Vault Newswire November 2002: Auditor dismissed Gemstar-TV Guide International Inc. fired KPMG LLP as its auditor, following a disagreement over the need to restate financial results. Gemstar restated its financial statements after it acquired the intellectual property of Fantasy Sports, an online game company. KPMG said the restatement was unnecessary. Unable to come to an agreement, Gemstar fired KPMG.

October 2002: KPMG becomes BP KPMG Consulting officially changed its name to BearingPoint, in order to further distance itself from former parent KPMG LLP. To publicize the name change, BearingPoint is expected to spend as much as $40 million on advertising, including commercials featuring professional golfer Phil Mickelson.

September 2002: Moms will love it For the sixth year in a row, KPMG LLC was named to Working Mother magazine's annual list of "100 Best Companies for Working Mothers."

August 2002: Americans and Belgians in it together A federal court ruled that the KPMG LLC must stand trial along with KPMG Belgium in shareholder suits arising from alleged accounting fraud at Lernout & Hauspie Speech Products NV. A federal judge said there was sufficient evidence to support that KPMG LLC "acted with recklessness or actual knowledge" in helping prepare Lernout's 1999 Form 10-K, which later proved fraudulent. KPMG said the allegations were "completely without merit," because "there was massive fraud inside L&H" designed to fool both investors and auditors.

July 2002: The return of Orange County The California state Board of Accountancy found KPMG guilty of gross negligence and professional misconduct in connection with the Orange County scandal of the mid 1990s. KPMG was found guilty of failing to discover that Orange County's treasurer was misappropriating funds, faking interest returns, and lying to investors. As a result, the board placed KPMG Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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KPMG Vault Newswire

on probation for one year and ordered the firm to pay costs totaling $1.8 million. KPMG criticized the board's decision. According to KPMG spokesman George Ledwith, "The claims by the board incorrectly challenge how KPMG reached its conclusions rather than claim our conclusions were wrong."

July 2002: IRS says no to shelter The IRS filed legal action against KPMG LLP and BDO Seidman LLP in hopes of forcing the accounting firms to disclose their tax-shelter dealings. The legal action details how the firms have banked hundreds of millions of dollars for providing tax shelter advice, at the U.S. Treasury's expense. The filings also disclosed the names of KPMG clients who had benefited from KPMG's tax shelter advice. Some of the more well-known KPMG tax shelter clients include California politician William E. Simon Jr., and his late father, William E. Simon Sr., a former Secretary of the Treasury, as well as Gary Winnick, chairman of Global Crossing Ltd., and the late stock-car racing champion Dale Earnhardt.

May 2002: Bargain hunting According to the Wall Street Journal, KPMG has hired 133 former Andersen auditing clients, which is second only to Ernst & Young's 150 pick-ups. Since Andersen was found guilty of obstructing justice in connection with Enron's bankruptcy, the remaining Big Five firms have been racing to pick-up former Andersen clients.

May 2002: O'Kelly's email spells trouble for SEC Chair Some Democrats in Congress called for SEC Chairman Harvey Pitt's resignation in connection with an email sent by Eugene O'Kelly, KPMG's new CEO. O'Kelly sent an email to KPMG 's staff saying he discussed the SEC's pending investigation of KPMG 's audits of Xerox Corp with Pitt in an April 26, 2002 private meeting. Because Pitt had represented KPMG as a lawyer before working for the SEC, his discussion of the case with O'Kelly raised conflict-of-interest questions.

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KPMG Vault Newswire

May 2002: KPMG partners up KPMG LLP agreed to a deal to hire 400 Arthur Andersen partners and employees in the Northwest U.S. The deal was just the latest of many announced by Andersen in the wake of its indictment for obstructing justice.

May 2002: Subtracting and adding KPMG laid off 90 employees in its Northeast operations because of economic conditions. The move came on the heels of KPMG offering jobs to 240 Arthur Andersen partners, who would work with the approximately 60 clients that have left Andersen and joined KPMG.

April 2002: Eugene new CEO KPMG's board named Eugene O'Kelly the firm's new CEO. O'Kelly took over the CEO duties immediately, succeeding Stephen G. Butler, who had indicated in late 2001 that he would be stepping down in 2002. The board also named Jeffrey Stein the new deputy chairman.

March 2002: Name change announcement KPMG Consulting, a former KPMG LLP subsidiary, has decided to change its name to "BearingPoint." The unit decided to change its name in order to further distance itself from its former parent, thus distancing itself from any allegations of conflicts of interest between consulting and audit services.

January 2002: In trouble with the Commission The SEC censured KPMG LLP for auditing a client's financial statements at the same time it had "substantial financial investments in the client," according to the SEC. KPMG neither admitted nor denied the SEC's allegations. KPMG spokesman Bob Zeitlinger said the firm made the investment inadvertently "in what we thought was a mutual fund sponsored by… a non-audit client." The SEC did not impose any monetary penalty.

October 2001: KPMG settles with the feds KPMG LLP agreed to pay $9 million to settle a federal lawsuit that accused the firm of helping one of its clients, Columbia/HCA Healthcare Corp., defraud Medicare and Medicaid out of millions of dollars during the early 1990s. KPMG was accused of helping some HCA hospitals in Florida and Kentucky get reimbursements that it knew were "false, exaggerated or Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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KPMG Vault Newswire

ineligible." A KPMG spokesman said, "We've agreed to settle in order to avoid the cost of litigation and put this decade-old matter behind us, and we vigorously deny that we engaged in any wrongdoing."

October 2001: Fired by copier Xerox fired KPMG LLP as its auditor in the midst of their ongoing dispute over Xerox's questionable accounting practices. KPMG had criticized Xerox, saying it found "material weaknesses in the company's internal control systems" and Xerox management failed to set "the appropriate tone with respect to financial reporting." Xerox, the subject of an ongoing SEC investigation, hired PricewaterhouseCoopers LLP as its new auditor.

June 2001: Restated results, KPMG approved KPMG client Xerox Corp. restated financial results for the past three years, after an investigation by KPMG and Xerox's board of directors discovered that Xerox had "misapplied" accounting rules. The changes, though, were minor. And, with the new statements, Xerox's results actually improved in 2000 and in the first quarter of 2001. KPMG signed off on the changes. happy

April 2001: Causing a delay KPMG refused to approve its client Xerox Corp.'s financial statements. As a result, Xerox will not file its annual report on time.

March 2001: KPMG has conflicting thoughts KPMG LLP has resigned as primary auditor for AIM Management Group's family of mutual funds, citing a conflict of interest. KPMG said an investment it made in an AIM money- market fund compromised its independence under federal securities rules. AIM, the eighth-largest U.S. mutual-fund company, said most of its mutual funds had been audited by KPMG since AIM's inception in 1976.

February 2001: KPMG Consulting IPO KPMG LLP spun off KPMG Consulting in an initial public offering. On the first day of trading, shares of KPMG Consulting rose 30 percent. The offering of 112.5 million shares was valued at slightly more than $2 billion.

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KPMG

Our Survey Says Open and shut It's not surprising that at a firm as large as KPMG, employees have many different takes on the corporate culture. One employee praises the "opendoor" atmosphere, where "managers are able to answer questions and provide guidance." Another insider offers a slightly different take: "It's nurturing for newbies. This means you find a manager you are compatible with and become a sponge." A former employee, though, says KPMG was "too big to feel a connection." She laments, "No training or mentoring occurred." As for atmosphere, says a contact, "Culture varies somewhat between offices. In DC, for example, there's a Gay/Lesbian support group, but Raleigh is very stuffy and 'old-boy.' In general, the smaller offices tend to be more rigid and controlling."

Perk-o-rama At KPMG "community involvement is encouraged and you are paid for four workday hours per month to perform volunteer work, provided that you match these hours with volunteer hours on your own time." One employee mentions that KPMG is a "bit unusual in that it combines vacation time with sick leave, so it's great if you're young and healthy, maybe not so great if you're sickly." As far as time in the office, "Some offices have flex time," reports a tax consultant reports. "For example, I work 10 to 7 to avoid rush hour traffic." At KPMG, "continuing education opportunities abound and usually involve travel, with [the firm] picking up the tab." Employees say, "When you start with the firm, KPMG gives you a new laptop, supplies and briefcase with the firm logo." The firm offers "five weeks of vacation" and KPMG "gives a bonus to those who pass the CPA exam in their first or second year." According to one contact, "My year it was $1,500 for doing it in the first year and $750 in the second year - before taxes, of course." Be forewarned: "Some perks vary from office to office, or partner to partner, or even manager to manager."

The name says it all In terms of reputation, Big Four firms are hard to beat. "KPMG is a very good, very solid name to have on your resume," says one former employee. "It will help you in the future, even if you can't stand the firm itself." Another contact agrees: "Because of the selective recruiting and training and experience gained, many companies try to recruit KPMG employees. You Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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KPMG Our Survey Says

will never have a problem finding a job." Yet another contact, who only worked at KPMG for five months, also concurs: "The name is great to have on your resume. It made a real difference in landing a job afterward -- even for the short period I was there. It really benefited me for moving on."

Time and threads One employee was surprised that KPMG doesn't have "the insane tax season crunch I expected. The KPMG philosophy is basically, we have a gazillion employees, why should anyone work overtime? I've been with the firm five months and I only have had to do overtime one week, and that was in March." In general, "If you're in tax, summers are very, very slow." With respect to the KPMG dress code, one employee reports, "My office, which is in Northern California, operates on a 'casual office' policy. That means Dockers with loafers are acceptable. And if you don't wear jeans on Friday everyone assumes you're interviewing with a rival firm. But other offices are more formal, as we get a lot of junior-high entrepreneurial types in the San Francisco area." In general, "dress depends on what client you're working for. You always dress one level above the client, so if the client wears jeans, you wear a collared shirt and khakis. In the office, it's business dress Monday through Thursday, business casual Friday."

Feels like diversity "I don't have the statistics, but my feeling is that KPMG is a very diverse firm," says one KPMG insider. "The woman I work for is from Puerto Rico, and my new hire class was nearly 70 percent female." While "the number of female partners is growing, in general "the Grand Pooh-Bahs are predominantly Caucasian males while the lower echelons are comprised of females and minorities." That is not necessarily the whole picture, though. Another insider volunteers that "One woman I worked for was made partner, and I saw other women and minorities get some really good opportunities." Furthermore, says one woman employee, "I have found no difference in the way that women and men are treated." One employee says, "KPMG is quite aware of its prior reputation as a bunch of old white guys, and is actively trying to rectify the situation."

The KPMG aesthetic Insiders say, "The offices are fairly nice" with "modern cubicles, ergonomic chairs, conference rooms, and undistinguished artwork on the walls." 18

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KPMG Our Survey Says

Typically "we don't have cafeterias, but do have an archive of take-out menus." Usually "each floor will have several coffee kiosks, refrigerators, microwaves, vending machines and usually a little break room." As for personal space, "managers and senior managers usually have their own offices, those who travel a lot share an office with someone else." KPMG has "a firm-wide policy of locating offices in inner cities, in order to support city cores." Some offices have been known to use a form of "hoteling," through which employees reserve an office or other workspace on a day-by-day basis.

For the ambitious Many KPMG staffers comment that KPMG is a "progressive and collaborative organization." "It's a great place to work and a very flexible and generous employer." One auditor notes, "I found audit and tax to contain a lot of grind work, although there were some really good projects." Another employee warns: "Overall, my experience at KPMG has been a good one, though certainly I've had my ups and downs. But it's not for everyone. Some people handle the travel, stress and long hours better than others. Our turnover rate is something like 27 percent, and I think we lose most of our people in the first few years of employment." One staffer summarizes his experience: "For a hardworking, goal-oriented professional, who can adjust and deal with the demands of a Big [Four] firm, KPMG is a great place to be. For somebody who prefers a slower, more adjusted pace of life, we may not be the answer."

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KPMG

Getting Hired Hiring Process What you need Audit and tax recruits should have an undergraduate business or math degree or other proof of quantitative ability. Liberal arts graduates are typically only considered in tax. Educational background or work experience that involves "any kind of writing, research, and analysis" is held in high regard. But be warned: a candidate's school, and perhaps even the classes taken therein, "might affect initial pay slightly." Favored schools depend on office location, as each office tends to recruit locally.

Loose interviewers According to insiders, KPMG stresses laid-back interviews, so don't expect to be grilled. Rather, be prepared to talk about past experiences, computer skills, ability to work independently, why accounting, and, of course, why KPMG. The firm's web site, www.kpmg.com, has a career section that lists openings all over the world. KPMG also maintains a separate web site, www.kpmgcampus.com, for school recruiting. The site allows candidates to submit resumes online, and offers interviewing tips and sample interview questions, including, "How do you define success?" KPMG interviewees can expect to go through two or three relatively relaxed rounds, which are nearly identical for undergraduates and MBAs. The first is "a screening interview over the phone," which "could be with anyone. It could be someone with a connection to the particular school, or your resume could have shown up on their desk." Candidates are informed by phone that they have made the second round, although some additional materials may be required before such a decision is made. For example, says one source, "I had to fax a report I had done in college."

To Apply For information on job openings in tax, assurance, advisory, and support services, log on to http://www.kpmgcareers.com. Here, you can also apply online, and learn more about the culture and career path in each service line, as well as each individual office in the U.S. On the site, don't miss the link Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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KPMG Getting Hired

to www.kpmgcampus.com, where you'll find out where KPMG recruits and when they hold information sessions.

Questions to Expect 1. Can you describe the most challenging situation you've ever had to deal with and how you dealt with it? KPMG fully expects to offer you constant challenges, and wants to establish that you can demonstrate the capacity to rise to them. 2. How do you define success? In general, something like "growing and learning with a supportive firm like KPMG and fulfilling my interests in community service" would hit the spot. But try not to sound too artificial. 3. What do you consider to be an auditor/consultant/tax associate's most important skills? You should familiarize yourself with the job description before answering this one. Check out the firm's career site, www.kpmgcareers.com. 4. What would someone you've worked for describe as your strengths, as well as areas that need improvement? This is an interview standard. The second part will require some clever spin doctoring to give the impression that you are not so arrogant as to believe that you have no weaknesses, but at the same time that those weaknesses are minor and can be overcome. 5. While you are on an engagement and auditing cash, you come across a possible error. You have become very good friends with the client and the error could result in his termination. What do you do? Here's a hint - your responsibilities are to the truth and to KPMG [not in that order], not with your new pal. 6. What specifically appeals to you about KPMG? It couldn't hurt citing KPMG's community service record, but you should also have something to say about the firm's international reach and industry experience.

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KPMG Getting Hired

7. Tell me about a valuable lesson you have learned in the past. Try to think of something that will translate well into the firm culture or philosophy, such as something about the value of hard work or getting along well with others.

Questions to Ask 1.Has the failure of the KPMG-Ernst & Young merger affected the firm? The KPMG brass would like to have you believe that it is just back to business as usual. Some industry insiders agree, but it is hard to imagine that it has not affected morale at all (not the mention the potential effects of the high costs incurred). 2. What kind of international experience might I expect to obtain at KPMG? Will there be any limits on transferring between offices? KPMG claims to be very open about office transfers, but you might as well find out for yourself if you have something specific in mind. 3. Will I be expected to get an advanced degree at any point? If you are in tax, you will be encouraged to get a CPA; consultants typically already have their graduate degrees. 4. Is it possible to transfer between one practice line to another? Some KPMG employees do start out in assurance or tax and then switch to consulting. If you are interested in more than one area, it might be helpful to hear about the actual steps involved in making such a switch. 5. What kind of feedback has KPMG gotten about its new advertising campaign? KPMG has taken a different approach to self-promotion than its competitors, refraining from the production of attack ads. Seeing how the firm's new slogan is "It's time for clarity," hopefully you'll get a straight answer to this query. 6. What is the progress of KPMG's initiative to increase its international presence? In September 1998, KPMG International chairman Colin Sharman announced some bold new goals for the firm. To accomplish them, KPMG must expand its already considerable reach. 7. Can you tell me more about KPMG's volunteer activities?

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KPMG Getting Hired

The list is extensive; this is a good way to show that you have the motivation and desire to make a difference in the community. Even if you are not truly interested, it is still a pretty good suck-up question. 8. How much travel is involved? And where? Know what you're getting into. KPMG is an international firm and some groups within the firm call for quite a bit of travel, both domestically and abroad. If you like to spend nights playing with your cats, some positions within KPMG might not be a good fit.

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KPMG

On the Job A Day in the Life Tax associate 8:00 a.m.: Arrive at work. Wolf down some trail mix. 8:30 a.m.: Attend a meeting with other team members and clients to discuss a tax reduction project. After the meeting, the team leader tells you to start work on a presentation for the next meeting, which is this afternoon. 9:00 a.m.: Dial up Powerpoint and do some preliminary work. You're already stressed enough from studying for the CPA exam. 10:30 a.m.: Call up one of your contacts at the IRS. She's a really nice woman and answers some questions you had about tax code. 1:00 p.m.: Eat lunch at desk. You usually don't, but you need some down time to yourself. 2:00 p.m.: You get an e-mail saying that the afternoon meeting has been postponed until tomorrow. Breathing a small sigh of relief, you get back to the presentation research. 5:30 p.m.: You've done what you can today; time to attend a KPMG CPA review course. You really want that $1500 bonus for passing the exam in your first year. 7:30 p.m.: Go out to Taco Bell with friends from work. You have to put some finishing touches on the presentation tomorrow, and tomorrow evening you leave for Chicago, so better to pack tonight.

Job Descriptions Tax associate Entry-level tax associates prepare and review tax returns, research tax issues, meet with clients in tax planning sessions and meet with IRS officials to discuss clients and regulatory changes. After some experience, tax associates will begin to train newer employees and develop a specific area of tax expertise.

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KPMG

Final Analysis KPMG covers more of the world than any other Big Four firm. And without a doubt, the KPMG name is a prestigious one to have inked on a resume. However, size and prestige do come with drawbacks. Some insiders say it's easy to get lost in the shuffle; managers aren't always available to mentor young professionals. Others say KPMG's culture is diverse to a disadvantage, differing from region to region, office to office. And yet other insiders complain about ugly below average salaries. That said, most agree the perks are pretty. Flex-time, continuing education, and liberal amounts of vacation time are all praised, as are the firm's commitments to nonprofit and volunteer issues. To be sure, KPMG, like most big accounting firms in the past year, has experienced its fair share of trouble with the feds. But with a new CEO and a brand name that still carries considerable weight, KPMG is a solid place to begin, or continue a career.

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KPMG

Recommended Reading Check out the KPMG web site for company news and press releases. In addition, we also recommend the following articles: • "Accounting Firms May Face A Ban on Selling Tax Services," The Wall Street Journal, December 4, 2002. • "Big Four Firms Face Post-Enron Scrutiny," The Washington Post, June 7, 2002. • "Accountant's Work With Xerox Sets New tests for SEC," The Wall Street Journal, May 6, 2002. • "Did KPMG Stand Up, or Cave IN, to Xerox?" The New York Times, April 12, 2002. • "Xerox Fires Auditor KPMG as Tension Continues," The Wall Street Journal, October 8, 2001. To learn what it takes to build a strong public company, read Agile Business for Fragile Time, written by two KPMG employees: Mary Pat McCarthy and Jeff Stein. Agile Business is the third book in KPMG's series on business. Mary Pat McCarthy is KPMG's global chair of Information, Transformation, Communications and Entertainment. Stein is the KPMG's deputy chair, COO, and management committee chairman.

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KPMG

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