VEP: Ernst & Young (Accounting) 2003 (Vault Employer Profile)

EMPLOY PROFILE VAULT EMPLOYER PROFILE:

ERNST & YOUNG

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 1–58131–227-X Printed in the United States of America

Ernst & Young

Table of Contents INTRODUCTION

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Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Ernst & Young at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

INTRODUCTION

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Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Ernst & Young at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

THE SCOOP

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History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Perks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

ORGANIZATION Chairman's Bio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Business Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Key Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

VAULT NEWSWIRE

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OUR SURVEY SAYS

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GETTING HIRED

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

ON THE JOB

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A Day in the Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Internship Program for Undergrads . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

FINAL ANALYSIS

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RECOMMENDED READING

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Ernst & Young

Introduction Overview Ernst & Young LLP is the U.S. member firm of Ernst & Young International Ltd., one of the Big Four global professional services organizations with 110,000 employees stationed throughout 135 countries. Ernst & Young audits over 100 of the Fortune 500 companies and has consistently posted double-digit growth and led its competitors in tax services and technology. The firm, though, has experienced its share of setbacks, most notably a failed merger with KPMG that revealed cracks in Ernst & Young’s worldwide structure. Ernst & Young has also been the target of a spate of lawsuits and accusations of conflicts of interest as it struggles to reconcile concurrent auditing and consulting relationships with certain clients. Even so, the firm did have cause to celebrate in 2002. In April of that year E&Y moved into its new 37-floor U.S. headquarters at 5 Times Square in New York; the firm expects to grow its Manhattan staff from 4,600 to approximately 6,000. And in May 2002, the firm began a significant expansion of its global reach, adding hundreds of former employees, including many former partners, of former big accountant Arthur Andersen.

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Ernst & Young at a Glance 5 Times Square New York, NY 10036 Tel: (212) 773-3000 Fax: (212) 773-6350 www.ey.com

UPPERS • Family-friendly leave and scheduling policies • Tuition reimbursement

DOWNERS DEPARTMENTS Assurance and Advisory Business Services Corporate Finance Emerging Growth Companies Solutions Tax Services

THE STATS Chairman & CEO: James S. Turley Employer Type: Private company (member firm of Ernst &Young International) Fiscal 2002 Revenue: $10.1 billion* No. of Employees: 110,000* No. of Employees in the U.S.: 33,000 No. of U.S. Offices: 90 *Worldwide revenue (Ernst & Young International)

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• Cramped working quarters for junior employees • Long workdays

KEY COMPETITORS • Deloitte & Touche • KPMG • PricewaterhouseCoppers

EMPLOYMENT CONTACT Ernst & Young LLP 5 Times Square New York, NY 10036

THE BUZZ

WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING

• • • • •

“A top accountant” “Dinosaur-like” “Solid firm” “Snobbish” “Well respected in financial industry” • “Conservative” • “Boring” • “Well-known”

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Ernst & Young

The Scoop History At heart, a nice Midwestern firm Ernst & Young goes back a century, to Chicago in the 1890s. At that time, many benighted American businesses had no notion of regulated accounting practice, and the government had yet to burden American taxpayers with the income tax. English businesses based in the United States, however, knew better, and sent for British-trained Scottish accountants to look after their investments. One enterprising Scotsman, Arthur Young, set up an independent accounting firm in Chicago in 1894. This firm became Arthur Young & Company in 1906. Meanwhile, two brothers, Alwin and Theodore Ernst, Americans who had been quick to pick up on the accounting concept, launched a tiny accounting firm in Cleveland in 1903. Alwin had previously worked for the CEO of a large industrial firm and believed that accounting could be used to help corporate management make smarter, money-saving decisions. Arthur Young and Ernst & Ernst got a big bounce in 1913, when the passage of the federal income tax suddenly created big business for tax departments. Arthur Young, growing steadily, formed a national partnership in 1921, uniting its five offices behind its new headquarters in New York City. Ernst & Ernst’s expansion and promotion hit a snag in the early 1930s, when the AICPA adopted a policy prohibiting members from advertising. For a time, A. C. resigned from the association. Still, the financial chaos of the 1930s proved to be lucrative for both Arthur Young and Ernst & Ernst, as the Great Depression spawned new financial reporting regulations that increased the need for accounting and auditing services. To snare enough employees to meet demand that decade, Arthur Young began to recruit college students and to train them in its first staff school. Both firm patriarchs went to their heavenly reward in 1948; Arthur Young at 84, and A.C. Ernst at the relatively tender age of 66. Arthur Young made news in 1957 by appointing the first female partner in what was then the Big 8, and Ernst & Ernst merged with British firm Whinney, Murray & Co. to become Ernst & Whinney. Finally, Arthur Young and Ernst & Whinney found each other, merging in 1989 to become Ernst & Young, the Big Four (formerly Five) firm we all know and appreciate today.

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Ernst & Young The Scoop

The merger that wasn’t With the creation of Citigroup, DaimlerChrysler, and others, the year 1998 will no doubt be remembered as a vintage one for mergers. But one sour note was the failed union between Ernst & Young and what was then KPMG Peat Marwick (now called KPMG). Announced in October 1997, the deal would have created the world’s largest professional services organization, with thousands of partners worldwide and $18 billion in total revenues. At the time of the announcement, neither company anticipated trouble – not only had KPMG and Ernst & Young helped numerous corporations negotiate the pitfalls of the merger process, they were also themselves the products of important mergers in the accounting industry. However, this deal faced heightened scrutiny from antitrust regulators, as government agencies notably the Department of Justice and the European Union Merger Task Force had recently begun to question why profits at the biggest professional services firms were increasing as prices remained flat. Given the prospect of regulatory inquiries in the United States, Japan, Europe, Canada and Australia, KPMG and E&Y called off the transaction in February 1998, stating that the merger “would have taken many months, incurring considerable costs and potentially considerable disruption to client service.” Other observers, however, noted that regulatory issues weren’t the only reason the merger failed. In particular, some argued that internal disputes had derailed the deal. Arthur Bowman, editor of Bowman’s Accounting Report, found it hard to believe that two major accounting firms had neglected to consider the costs of government scrutiny, and commented to The Washington Post: “They’re using the regulatory process as their excuse for not merging.” Instead, Bowman said, “the concept of the merger was driven by the U.S. partners – it caused a lot of anguish outside the [United] States.” Whatever the reason for the deal’s failure, the fact that KPMG and E&Y remained separate certainly helped open the door for the Price Waterhouse and Coopers & Lybrand, whose merger passed regulatory muster and reduced the Big Six to the Big Five. One mega-merger is apparently easier to take than two.

Consulting: We’ll always have Paris Ernst & Young currently ranks as the second-largest integrated professional services firm in the U.S. At one time, consulting was a major component of the Ernst & Young machine, with 20,000 employees (12,500 professionals). Late in 1999, rumors started swirling that French consulting giant Cap Gemini was in talks to acquire E&Y’s consulting unit. In May 2000, the 4

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Ernst & Young The Scoop

rumors proved true, and E&Y sold its consulting services to the Paris-based company for $11.2 billion. The deal nearly doubled Cap’s revenue and increased its worldwide employment by almost 20,000. By selling its consulting unit, Ernst & Young hoped to avoid potential conflicts of interest between its businesses; industry watchdogs repeatedly argued that Big Five firms let accounting irregularities slide in order to maintain consulting contracts. E&Y was the first Big Five firm to separate its consulting and accounting units.

Tip top taxmen In July 2001, E&Y was named the best tax and financial planner in the U.S. by Worth magazine’s Reader’s Choice Survey for the second year in a row. The survey assesses the performance of products and services based on how well they have served the interests of the magazine’s readers, whose median net worth is more than $1.25 million. Ernst & Young supplies customized tax information to clients through its international Online Tax Advisor service. The service debuted in July 1999 with U.S.-only advice, and currently offers advice in 11 different countries.

Face to face with the feds Like all the big accounting firms, Ernst & Young was forced to defend itself in 2002 against charges of questionable or biased audits. In one case, the SEC investigated E&Y for its audit of Cendant Corp. The SEC questioned E&Y’s practice of giving Cendant price breaks on its audits in exchange for consulting business. The commission also later warned three Ernst & Young auditors that they could face civil charges for their role in the Cendant audit. Additionally, The Wall Street Journal reported that E&Y’s audit materials for Computer Associates were subpoenaed, and that E&Y was under investigations for transactions it promoted and approved for PNC Financial Services Group Inc. In another case, an SEC commissioner charged E&Y in May 2002 with violating auditor independence rules by marketing and installing products made by PeopleSoft, a Pleasanton, Calif.-based software maker and Ernst & Young client. The SEC wanted the firm to terminate the marketing agreement and return fees for auditing work done during the agreement. E&Y denied that its sales relationship was improper, and argued that a single SEC commissioner couldn’t authorize an enforcement action. The SEC went ahead with the E&Y investigation based on the vote of only one member, 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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Ernst & Young The Scoop

rather than a quorum of at least two members. This ultimately led to the case’s dismissal in July 2002, when an administrative law judge threw out the case, saying the SEC improperly instituted the suit by going ahead with only one vote. Most recently and, potentially, most damaging, a suit was filed against Ernst & Young in November 2002 in connection with the firm’s audit of Superior Bank, which federal regulators seized in one of the largest banking failures in ten years. The FDIC suit accused Ernst & Young of fraud and gross negligence, claiming that Ernst & Young’s head office in New York knew of accounting improprieties at Superior, but failed to disclose them until after it had sold its consulting division to Cap Gemini; Ernst & Young didn’t want the negative publicity while it was trying to sell the unit, the suit maintains. The FDIC, which paid out more than $750 million from its insurance fund because of Superior Bank’s failure, is looking to claim more than $2 billion in compensatory and punitive damages from the Big Four firm. The regulators indicated they were seeking such a large sum in the case because Ernst & Young had a history of regulatory offenses. Ernst & Young said it intends “to vigorously defend all claims” made in the suit and disputes any allegations that it had anything to do with Superior Bank’s failure.

One’s pains are another’s gains Following Arthur Andersen’s June 2002 conviction of obstructing justice, The Los Angeles Times called Ernst & Young the “biggest winner from Andersen’s meltdown, gaining 189 former Andersen clients, or more than a quarter of the business that has defected from the troubled accounting firm.” According to the Times, the new E&Y clients accounted for $300 million of Andersen’s $4 billion in U.S. revenue for 2001. Included among the client pickups were several huge hotel chains, including Hilton Hotels, Marriott International, Westin Hotels and Starwood Hotels & Resorts Worldwide. Ernst & Young also picked up about 200 partners and 1,000 staff members in key regions such as New York, Los Angeles and Baltimore. E&Y also agreed to take over 54 of Andersen Worldwide’s 83 overseas partnerships.

Treating you well For four consecutive years, E&Y has been named to Fortune’s “100 Best Companies to Work For,” a list of firms that best help employees balance their work and personal life. In the 2002 rankings, Fortune reported that one of the reasons a company makes the list is its “willingness, like Ernst & Young, to scramble to come up with creative ways to keep employees 6

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Ernst & Young The Scoop

satisfied and to treat them with respect and dignity.” For E&Y, “that meant redeploying people, lending staff to clients with temporary shortages and offering voluntary leaves of absence at 25 percent of pay.” Ernst & Young also has been named to Working Mother’s “100 Best Companies for Working Mothers” list for four straight years from TK1 – TK2. The firm landed on Training magazine’s 2002 “Training Top 100,” snagging the No. 7 spot for its training and education programs.

Pay From undergraduate studies Salary, of course, will vary by city, but those coming to the firm from their undergraduate studies can expect salaries between $35,000 and $40,000.

From MBA or other graduate programs Starting salaries will range from $38,000 to $45,000. After five to seven years, those promoted to manager can expect to be making between $70,000 and $100,000. The firm metes out bonuses based on personal, unit and firm-wide performance. Personal performance is evaluated in bi-annual reviews where managers review feedback from “everybody you work with,” including partners.

Perks • 10-25 days of paid vacation, depending on rank and tenure • Generous leave of absence policy • Training, reimbursement for CPA coursework and exams • 401(k) plan (not matching) • Reimbursement for late-night cabs, meals, etc.

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Ernst & Young The Scoop

“I get 22 vacation days and 3 personal days; I think 5 weeks is pretty fair, and I’d consider that a perk. The other thing I really enjoy is the truly professional environment. No one cares at what time you walk in or walk out – no one’s holding you to a schedule. I like that a lot. I don’t like to be micro-managed. Part of this [lack of a set schedule] is because you have a lot of work do; it’s not that you don’t come in. If you need to go to the DMV or to do the doctor, no one cares. You’re allowed to set up your own schedule.” – Ernst & Young manager

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Ernst & Young

Organization Chairman’s Bio James S. Turley: The lifer Jim Turley’s career at Ernst & Young began 25 years ago in Houston, Tex. After receiving his undergraduate and master’s degree in Accounting from Rice University, Turley joined E&Y in its Houston office in 1977. Turley returned to his hometown, joining the firm’s St. Louis outpost in 1979. And less than ten years later, Turley became an E&Y partner. The same year he joined the partnership, he also began a three-year stint in Cleveland as the firm’s national director of client services and business development. In 1991, Turley headed back to St. Louis, where he served as a coordinating partner on major E&Y accounts. Turley moved yet again in 1994, traveling to Minneapolis to become the managing partner of E&Y’s upper Midwest area. He left the Midwest in 1998 to manage the firm’s Metropolitan New York division. Turley became deputy global chairman in July 2000 and, at the age of 45, succeeded Phil Laskawy as Ernst & Young’s global chairman in July 2001.

Business Units Assurance and Advisory Business Services E&Y’s Assurance Services help hundreds of companies keep their noses clean. The group offers services in audit, review, compilation, SEC compliance, internal control reviews and regulatory reporting. Worldwide, approximately 39,000 professionals located in 130 countries work for the firm’s assurance unit. E&Y’s Advisory Services includes the sub units Business Risk Services, Transaction Support Services, Technology and Security Risk Services, and Specialty Advisory Services. Business Risk concentrates on maximizing the value of clients’ internal audit functions. Technology and Security Risk focuses on providing IT systems management advice and solutions. Transaction Support assists in deal closings and post-deal transitioning. And Specialty Advisory provides services related to cash management, dispute

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Ernst & Young Organization

resolution and litigation, restructuring and bankruptcy, government contract services and environmental consulting, among others.

Tax Services E&Y’s Tax Services group focuses on preparing local, state and federal tax returns and offers special expertise in handling issues related to expatriate tax, employee benefit plans, tax-exempt organizations, trusts and individual income tax. This group also helps ease clients’ tax burden and assists with accounting methods, international tax issues, IRS procedure, personal financial consulting and analysis of developments in tax law.

Corporate Finance The Corporate Finance practice is broken out between Ernst & Young LLP’s Valuation Advisory Services and its separate, but affiliated investmentbanking unit, Ernst & Young Corporate Finance LLC. Valuation Advisory assists clients in the valuation of equity, debt, derivatives, real estate, business enterprises and other assets. Corporate Finance’s LLP focuses on providing M&A, capital raising and restructuring advisory services to middle-market companies.

Emerging Growth Companies Solutions This group advises rapid-growth companies on meeting financing needs, planning and executing transactions and building and improving infrastructure. Emerging Growth helps companies at all stages – from startup to early stage to market leader.

Ownership Ernst & Young LLP is the U.S. member firm of Ernst & Young International, the umbrella organization for all of the Ernst & Young member firms. Individual firms in each country are separate legal entities, and there is no profit sharing on an international basis.

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Ernst & Young Organization

Locations Headquartered in New York, Ernst & Young LLP has offices in about 90 U.S. cities. (Ernst & Young International has offices in over 130 countries.)

Key Officers James S. Turley: Chairman & CEO Ernst & Young, Chairman Americas Richard S. Bobrow: Global CEO Norbert R. Becker: CFO and Global Managing Partner, Finance and Infrastrucure

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Ernst & Young

Vault Newswire November 2002: E&Y handed Superior suit The Federal Deposit Insurance Corp. filed a suit against Ernst & Young, accusing the auditor of playing a part in Superior Bank’s failure in 2001. The FDIC alleges that E&Y delayed alerting regulators of accounting improprieties because the firm did not want negative publicity while it was selling its consulting unit. Regulators are seeking more than $2 billion in damages.

October 2002: E&Y secrets revealed in CEO’s divorce Some of Ernst & Young’s most closely held financial information was revealed in E&Y CEO Richard S. Bobrow’s divorce proceedings. Among the details made public in the CEO’s divorce from his wife of 24 years was the total enterprise value of Ernst & Young, as well as the value Ernst & Young placed on its consulting practice before selling it to Cap Gemini in May 2000. The judge in the case put a value of $5.53 billion on Ernst & Young, and documents in the case indicated that E&Y valued its consulting practice at $4.75 billion, right before it sold the practice for over $11 billion.

July 2002: SEC suit against Ernst & Young dismissed An SEC case against Ernst & Young for violating auditor independence rules was dismissed. An administrative law judge said the SEC improperly instituted the suit, which stemmed from E&Y’s work with PeopleSoft, by going ahead with it with only one vote, rather than a quorum of at least two SEC members.

June 2002: Partnering up Ernst & Young announced that 130 former Arthur Andersen professionals, including 10 former partners, would join the firm in its Global Employment Solutions (GEmS) practice, pushing the number of GEmS professionals past 2,500. About 1,000 of these employees work in the Americas.

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Ernst & Young Vault Newswire

June 2002: Adding structure Ernst & Young announced that it will purchase Arthur Andersen’s Real Estate/Structured Finance Group. With the acquisition, E&Y will add 30 professionals to its Structured Finance Advisory Services practice.

June 2002: E&Y welcomes hundreds more Ernst & Young signed an agreement to hire 332 professionals and staff from Arthur Andersen’s New York office. Most of the new hires will become part of E&Y’s Metropolitan New York Area office.

June 2002: Expanding West E&Y announced that it signed agreements to hire approximately 100 Arthur Andersen professionals from the crumbling firm’s Los Angeles, Denver, Phoenix and San Diego practices. Most of these new employees will be located in Los Angeles.

May 2002: SEC charges E&Y The SEC charged E&Y with violating auditor independence rules by marketing and installing products made by PeopleSoft, a Pleasanton, Calif.based software maker and Ernst & Young client. The SEC wants E&Y to end the marketing agreement and return fees for auditing work done during the agreement. E&Y denied that its sales relationship was improper.

Feb 2002: Train and win Ernst & Young received Training magazine’s annual Training Top 100 Award. Training ranked E&Y No. 7 out of the 800 companies that were considered for the annual award. E&Y was named best in its class among professional services organizations.

January 2002: Gaining Fortune’s favor For the fourth year in a row, Ernst & Young was named one of Fortune magazine’s 100 Best Companies to Work For.

January 2002: Rudy and Ernie hook up Ernst & Young and former New York City mayor Rudolph W. Giuliani established an alliance to offer consulting services and to make and manage 14

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Ernst & Young Vault Newswire

investments. Giuliani Partners LLC, the first company formed by the alliance, will concentrate on advising CEOs and boards of directors on the protection of their companies’ assets, knowledge, people and brand. In addition, the new firm will advise government leaders on emergency preparedness, management effectiveness, and service improvement issues.

October 2001: Working it again For the fourth consecutive year, Working Mother magazine named Ernst & Young one of the 100 Best Companies for Working Mothers.

September 2001: E&Y’s IT recognized Ernst & Young was named one of the most innovative users of information technology in the U.S. in the annual InformationWeek 500 issue. Among the top 500 companies in the rankings, E&Y placed No. 88.

July 2001: Jim in, Phil out James S. Turley succeeded Philip A. Laskawy as Ernst & Young global chairman. Laskawy retired after seven years as chairman and 40 years of total service with E&Y. Turley, who has been with E&Y for the past 24 years, was most recently the firm’s deputy global chair.

July 2001: E&Y deemed worthy by Worth E&Y was named the best tax and financial planner in the U.S. by Worth magazine’s Reader’s Choice Survey. Worth’s survey rates the performance of products and services based on how well they have served the interests of its readers, whose median net worth is approximately $1.25 million.

February 2001: In summary, E&Y wins Ernst & Young was awarded summary judgment in a securities class action lawsuit brought by shareholders IKON Office Solutions, a former E&Y client. The decision upheld the financial audit opinion that E&Y provided IKON during the company’s 1997 fiscal year. The shareholders, who had been seeking $800 million in damages, alleged that Ernst & Young knew of, or should have been aware of, overstatements made by IKON in its 1997 financial statements.

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Ernst & Young Vault Newswire

February 2001: Ballots, in addition to beans For the second consecutive year, Ernst & Young will sponsor and tabulate the voting for the ESPY Awards (Excellence in Sports Performance Yearly). Ernst & Young auditors will confirm and validate the balloting for the annual awards show.

February 2001: Mergin’ on the mainland Ernst & Young signed an agreement to merge with Da Hua, the leading mainland China accounting firm. Da Hua is the top audit firm on mainland China in terms of the number of listed companies audited, and asset base and combined sales of listed client companies. The merger will push the number of Ernst & Young employees on mainland China over 1,100.

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Ernst & Young

Our Survey Says Structure without supervision Ernst & Young’s size brings both advantages and disadvantages. One contact notes that “it’s a large firm, and if you’re ambitious, it can be tough sometimes.” The same contact also says E&Y is “great if you want to settle down, but if you want to be making the most money of anyone your age, or if you want to do everything that interests you, you might get frustrated. It’s more structured. You get assigned to something and that’s your project – hopefully you’ll like it, because that’s what you’ll be doing for a while.” Structure, though, doesn’t mean that management is always keeping a close watch over employees. One Los Angeles-based insider cites the “lack of management” as the best thing about working at E&Y. He adds, “I’m free to work on my own schedule, without someone looking over my shoulder, provided that the work quality is good.” Note, however, that the rigid structure reported by some working in U.S. offices doesn’t necessarily exist in other countries.

Going abroad? E&Y insiders tend to comment on the firm’s increasing international outlook and encouraging attitudes towards going abroad. One contact notes that 30 to 40 percent of his officemates actively chose international assignments. “It’s really encouraged,” he says. “I guess because of globalization, and they know that a lot of these people would just leave if they couldn’t go abroad. It’s very easy to transfer between countries.” Some insiders, though, are critical of E&Y’s global outlook. Remember that some speculated that the merger with KPMG failed because of fundamental differences between the firm’s U.S. partners and those in offices abroad. One contact confirms this and explains that Ernst & Young is “all over the world, but has trouble acting like a global organization.” This source adds, “It’s a domestically focused organization. You have these huge databases, but the vast majority is domestic information. The attitude of most of the people who really run the show is that only the U.S. matters.”

Paying fair Pay doesn’t seem to be one of E&Y’s strong suits, though it is competitive with other Big Four firms. “As for compensation,” one contact says, “the general pattern is that you make a fair salary, but nothing spectacular.” The 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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Ernst & Young Our Survey Says

same individual notes, however, that the pay is “good lifestyle money,” and that “you’ll never have to beg on the floor of a car dealership for a loan.” Another source says he’s “satisfied” with E&Y’s pay package. “The firm rewards you if you do well,” he explains. “I’ve never felt that I did more than expected and wasn’t compensated for it.” Another employee calls E&Y’s incentive plan “rare for this type of firm.” He adds, “I think that the plan is fairly written and gives me good long-term upside potential.”

Some months are longer than others When asked about hours, E&Y contacts consistently reply with a comforting, “They aren’t that bad.” A senior manager in international tax says he typically works 10-hour days, from 7:30 a.m. to 5:30 p.m. One former auditor says he worked 50-55 hours per week, with the only exception coming during the busy season, in March and April, “when hours were about 70 per week.” He adds, “There was no ‘face time,’ so temporarily idle works face “no shame in going home.” Another source confirms the cyclical nature of auditing work: “They’ll spend half the year working like demons, and the other half on the golf course.”

Tech and support Regarding technology, Ernst & Young certainly practices what it preaches. “Technology-wise, E&Y spare no expense, no matter what area,” says one insider. Another agrees: “Technologically, it’s extremely advanced. Every time there’s a new technology it’s on your desk.” As for support, reviews are mixed. Insiders note strong graphic services, as Ernst & Young “wants things to look graphically advanced.” But one contact says support overall is “not very good.” Another source disagrees, calling the E&Y support staff “pretty good.” Even so, the contact admits that support could be cut back. “Personally, I don’t believe junior people should have much support. You can do your own copying.”

Higher learning on the job Praise abounds for E&Y’s training program. “The firm has really good training programs. They expect you to come in with a certain amount of knowledge, but they offer a lot,” explains one contact. “We encourage everyone to manage their own career,” says another. And another source adds, “If you find a program you’re interested in, there’s not much red tape to

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Ernst & Young Our Survey Says

go through.” Another insider describes a variety of classes ranging from software training to language classes.

Approved Our Ernst & Young contacts are generally satisfied with their experience. A former auditor says “The job itself is not the most stimulating, but it is definitely a great stepping stone to other things: I am going into M&A at an extremely prestigious investment bank following business school, and the skills I learned at E&Y are a big reason I got the job.” According to a senior manager in tax, “What’s great is the access to partners. They’re accessible and willing to help – which makes it a lot easier to deal with your job.” Another insider, who used to work for Deloitte, reports that employees at E&Y even have access, albeit limited, to the very top employees at Ernst & Young. He explains: “About once every three weeks the E&Y chairman leaves everyone a voice mail to give us a view of the overall direction of the company. At Deloitte, you’d never get that voice mail.” The contact does admit, “Most of the time, the voice mail is pretty boring,” but adds, “when there has been some big news, it’s nice to get the voice mail – so I know how I should react to client inquiries.”

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Ernst & Young

Getting Hired Overview of the Hiring Process Breaking in Ernst & Young sets its hiring goals in the spring of each year, organizing its strategic planning and forming “school teams,” which each have their own budgets. Each team has a “campus ambassador” and “campus captain.” The qualities that E&Y says it looks for in recruits include “intellectual competence, flexibility, communication skills, team skills, leadership skills, motivation, customer service focus, selling and influencing ability and technical skills.” Each interviewer focuses on one or two of these factors. Among the questions interviewers ask to identify these skills: “Tell me about a situation where you used your [skills in one of these factors]. What was your role? What did you do? What happened? What did you learn from this experience?” One insider says he had “five interviews, each a half hour long.” He adds, “There was nothing too difficult about the interview process – just questions about prior jobs and experiences.” Insiders consistently note that the firm is open to all majors, but that preference is given to those with technical backgrounds, strong analytical skills and experience working number-intensive items such as spreadsheets. Computer skills, like everywhere else, are actively sought after. Ernst & Young typically has a wide variety of entry- and higher-level jobs available for those with consulting, tax, finance and computer experience. Ernst & Young International’s web site, www.ey.com, has links to recruiting pages of all the worldwide Ernst & Young offices, including the U.S. branches of Ernst & Young LLP.

Deep thoughts, by a back door man While we recognize that few of our readers will be applying directly for jobs in the United Kingdom, we include the thoughts of a British survey respondent on the auditing side whose experience may well be useful for all E&Y applicants. He tells us that he first applied to the largest firms in London, “and got bounced by all of them.” Undaunted, he then applied and was accepted to work at an E&Y branch in a much smaller town. He says, “The advantage of this ploy is that once you’re in, you’re in. No one is gonna care that your CV says E&Y ‘middle of nowhere’ vs. E&Y ‘big city.’ All they

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Ernst & Young Getting Hired

see is E&Y. Plus, within E&Y and other firms, you can then transfer. Prove your worth by being great for a year and then say that you want to move. With a year’s experience you should be OK. So,” he adds, “if you’re prepared to sacrifice, creeping through the backdoor via E&Y ‘middle of nowhere’ is a very good option.”

To Apply Ernst & Young’s web site, ww.ey.com, allows students to check out dates of on-campus recruiting events and learn more about the application and interview processes. The site also allows experienced professionals to view job posting and submit resumes online.

Questions to Expect 1. Describe a situation where you used your communication skills.” Be prepared for a few follow-up questions as well: What exactly was your role? What do you think you learned from this experience? 2. I see from your resume that you worked on developing a database during your summer job. Tell me a bit about that. How exactly did you use your skills there? “They want to see your skills in action, and to start the process of the full skills match.” Also, note that Ernst & Young interviewers won’t be necessarily looking to see that you’ve done high-profile work for fancy companies. They simply want to see that you “have the right skills and you’ve used them.” 3. What are some of the activities you’ve been involved in at school? Says one of our contacts, “We’re looking for diversity, not just in terms of ethnicity and gender and things like that, but also in terms of interesting backgrounds. We really want people with different ways of solving problems.” Here you might want to pick out an activity where you showed some of those famous “mega-competencies” above: leadership, technical skills, team spirit, flexibility, motivation, communication and intellectual competence. 4. What are some of your favorite classes?

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“We’re going to ask them what sorts of classes they’re taking.” Again, think of “skills in action.” You might want to structure your answer to show off some of your talents. 5. Give me an example of how you worked in a team environment. What was your role? Insiders stress the importance of teamwork. “A huge part of the job.” “We want leaders and followers.” 6. In which industries do you feel you have the most experience? What are the most significant developments in your industry this year? As you are no doubt aware, key factors of industry analysis include: how rapidly is the industry growing; whether the industry is consolidating; how intense the competition is among competitors; whether market players have pricing power; and whether products are considered commodities. 7. What has driven you to pursue accounting as a profession? Explains one contact, “Because of the recent developments and issues surrounding the profession, this has become one of the key questions we ask.”

Questions to Ask 1. Generally speaking, how many projects will I be working on in this department? Insiders report varied work requirements depending on the department. 2. What are some of the travel requirements in this department? Says one, “You want to get a sense for whether you’ll get sent to Topeka and whether you’ll be there for a year, or working there four days a week or what.” Remember, Ernst & Young is a huge organization, but by no means a monolith. Often, local office culture will vary. 3. I understand that Ernst & Young has enjoyed high rates of growth over the past few years. Do you think the firm will keep growing at the same rate? Have you felt the effects of this growth in this department? 4. I’ve heard Ernst & Young has great training. What sort of advanced coursework does E&Y offer? 5. Could you tell me more about the structure of the tax division – and the differences between the tax compliance and tax consulting groups?

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Ernst & Young Getting Hired

“It’s very important to understand how the tax group is laid out,” says a tax employee. 6. How will the Sarbanes-Oxley act impact your group? Signed into law in July 2002, Sarbanes-Oxley introduced a wide range of new regulations for governing companies and auditors, in an effort to restore investor confidence after scandals at Enron, WorldCom and other companies. Among other things, the act requires accounting firms to rotate their supervising audit partners, prevents accounting partners from jumping directly into upper management at client companies and created an independent board to oversee the accounting industry. This board, as well as the new regulations, will likely alter the shape of the accounting industry, if not individual accounting firms themselves. As a result, advises one E&Y insider, “no matter what group you’re entering, outside of audit, you should get a feel for whether Ernst & Young is going to be in that business line for the long term.”

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Ernst & Young

On the Job A Day in the Life Senior Manager – Tax Services 7:30 a.m. Arrive. 7:35 a.m. Get coffee. Wake up. Check and return e-mail. Catch up with people in the office. 8:00 a.m. Work on forecasting a client’s taxes. 10:00 a.m. Conference call with client to discuss forecasted taxes. (“Several E&Y people are usually on the call, though sometimes I’ll talk to the client by myself. It’s more beneficial to have different levels on the phone, so our group stays coordinated.”) 11:30 a.m. Lunch. (There aren’t too many places to eat in Detroit. So we usually go to Greektown, and sometimes to Foran’s or Maverick’s.”) 12:30 p.m. Work on presentation for prospective client. 1:30 p.m. Strategy session with group (“Where we want to go in terms of market ideas or client check ups.”) 3:00 p.m. Meeting with prospective client out of the office. (“We’d meet with a client to discuss our strategy to minimize their taxes. We’d lay out the savings strategy and make sure there aren’t any reasons why, internally, they wouldn’t want to implement it or couldn’t implement it. We would discuss the benefits and, of course, discuss the results of our projections.”) 4:30 p.m. Return to office. Check e-mail and voice mail. Work on forecasts for clients. 5:30 p.m. Leave for the day. (“On average, I leave by 6 p.m.”)

Manager, Personal Finance Counseling 8:30 a.m. Arrive in the office. Check voice mail and e-mail. (“Since I’m on the West Coast, I usually have a backlog of voice mails and e-mails in the morning; it could take me an hour to get through them all.”) 10:00 a.m. Meet with a client outside the office. (“Typically, I’d go over an individual’s investment performance, my recommended changes in their asset 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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Ernst & Young On the Job

allocation and just talk to them – to try to give them comfort that they’re doing the right thing, which, in this economy, is especially important.”) 11:00 a.m. Meet with an outside vendor, say, a money management firm, in the office. (“A money management firm will come in and tell us about the recent performance of their portfolio, how they are positioning the portfolio and answer any of our performance or qualitative questions.”) 12:00 p.m. Lunch. (“I usually meet a friend, and we go out to lunch. There are restaurants all over the place [in downtown Los Angeles].”) 1:00 p.m. Meet with another employee in your group. (“I work with four other people and I meet with each of them at least once a week to figure out where they are on various projects, and to see if I can answer any questions for them or be of help in any way.”) 2:00 p.m. Meet with boss. (“I spend a half hour each day with my boss. We talk about client things mostly.”) 3:00 p.m. Prepare for various client meetings. (“I’m continually meeting with clients, so I’m always putting together materials for meetings. I might write a follow-up to a meeting as well. For example, last week a client who owns one million shares of a large Internet company wanted to sell some calls. Today, I’ll spend a few hours working with Morgan Stanley, Goldman Sachs and Lehman Brothers to try to price calls for him. Once I get all of the information, I’ll have a have a conference call with the client.”) 4:00 p.m. Firm-wide conference call. (“The biggest gripe I have about this place is the bureaucratic garbage that I have to do each day. Today, for example, we have a ‘Town Hall’ meeting. I don’t even know what a Town Hall meeting is, but it’s going to take two hours of my time. At some point, I also have to fill out my personal goals and development – something I have to do online. I heard it takes four or five hours to complete. It was due in October, and I still haven’t done it yet. On average, an hour of time is lost each day to stuff like this – I think it’s ‘lost,’ but to someone else it’s probably the most important hour of the day. It makes it difficult to service clients when you have to take an hour out of your day for these types of HR issues.”) 5:00 p.m. Continue to prepare for various client meetings. 6:00 p.m. Work on tax-related client issues. (“Later in the day, there’s always some specific client issue to take care of, which all depends on time of year. Near the end of the year, for example, we take a look at tax-loss harvesting; taxes are such a large cost to individuals, particularly in California, so we

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have a lot of year-end tax planning to do. I’ll meet with 25 clients, probably over the next 15 days, and have an hour or two conference with all of them.”) 7:00 p.m. Go home.

Internship Program for Undergrads Internships for college students take place throughout the year, although the majority are summertime positions. Normally, an internship begins with a three-day orientation period at the office where interns are introduced to general firm matters, technical resources and local issues. Next, interns are “whisked away” for training that may last from three days to one week. When they return, they are assigned to their engagement team, which will work usually on one specific project. For more information on internships, check out the career section of the E&Y web site.

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VAULT CAREER GUIDES GET THE INSIDE SCOOP ON TOP JOBS “Cliffs Notes for Careers” – FORBES MAGAZINE

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Ernst & Young

Final Analysis Although Ernst & Young, like many big accounting firms, has had its share of recent troubles with the law, the firm is still one of the most prestigious finance employers in the U.S., if not the world. Insiders praise the Big Four firm for its global reach and outlook, its hands-off management style and its perks and benefits. Industry publications regularly recognize Ernst & Young for its work/life balance and for its excellent training programs. Ernst & Young does, however, receive some complaints from inside sources about bureaucracy; it is, after all, a huge enterprise – a huge enterprise made even larger in 2002 with the addition of hundreds of former Arthur Andersen employees.

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Ernst & Young

Recommended Reading E&Y’s web site (www.ey.com) provides press releases, recent news and employee testimonials. For further news on the company, check out the following articles: • “Ernst & Yong Is Sued for Role In Failure of Superior Bank,” The Wall Street Journal, November 4, 2002. • “Ernst Finances Are Disclosed In Documents In a Divorce,” The New York Times, October 15, 2002. • “Even Without Consulting Arms, Accounting Firms Still Consult,” The Wall Street Journal, September 23, 2002. • “Judge Dismisses SEC Proceedings Against Auditor,” The Wall Street Journal, July 3, 2002. • “Company Fading From Big 5 Picture; Accounting: Staff and client defections mount, giving the firm’s four largest rivals a growth spurt, Los Angeles Times, June 17, 2002. • “Area Andersen Workers Join Rival; Ernst & Young Gets 400 With Acquisition of Most of Regional Group,” The Washington Post, May 17, 2002.

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