TURNAROUND YEAR
Accounting Firms Boosted OC Staffs 3% in Past Year; Sarbanes-Oxley Keys Growth
By Chris Cziborr
Orange County’s biggest accounting and management consulting companies bolstered local employment 3% in the past year, with the Sarbanes-Oxley Act spawning demand for their services.
Sarbanes-Oxley, a corporate reform act, introduced tighter rules on accounting compliance, tracking and fraud. Professional services companies said Section 404 of the act, which requires public companies to boost oversight of fraud controls, has been a particular help to the industry.
The Business Journal’s list of OC’s 50 largest accounting and professional services firms ranks companies by OC employment. The companies on the list together employ 3,918 workers.
The job gains come on the heels of two consecutive years of declines. Last year, accounting firms on the list trimmed their OC staffs by 10%.
One notable change to the list: No. 5 PricewaterhouseCoopers sold its consulting arm to IBM Corp. last year, with about 240 Irvine workers going to IBM in the deal. Computer hardware maker IBM was not included in the ranking.
The list is dominated by the Big Four accounting firms,No. 1 Deloitte & Touche LLP, No. 2 Ernst & Young LLP, No. 3 KPMG LLP and PricewaterhouseCoopers. Together, the Big Four represent 43% of workers on the list’s professional services firms.
The number of partners employed by OC operations rose 1% to 356. And the 50 companies on the list grew company-wide staffs 5% to 556,147.
Repeating at No. 1 on this year’s list is Deloitte, which reported a 2% drop in OC workers to 767. Deloitte grew firm-wide employment 21% to 115,000.
“We added a lot of Andersen people firm-wide, but the OC office already was adequately staffed before the Andersen collapse,” said Robert Grant, managing partner of Deloitte’s Costa Mesa office. Deloitte ended up with about a dozen Arthur Andersen workers in the wake of last year’s collapse of the troubled firm.
“We had a solid year and are looking forward to increased growth next year as the economy rebounds,” Grant said. “And with Sarbanes-Oxley placing limitations on the scope of services an audit firm can provide, it really creates this great opportunity for other accounting firms to sell work into other companies.”
Prior to Sarbanes-Oxley, many public companies typically had one provider doing audit and other services, he said.
No. 2 New York-based Ernst & Young moved up a notch with steady employment in the county: E & Y;’s Irvine office added one net worker for a total of 404.
Irvine partner Bruce Stump said E & Y; expects to grow its OC staff 5% to 10% in the next year.
“We’ll see the economy start to turn around in the latter half of the next 12 months,” said Stump.
No. 3 New York-based KPMG also moved up one spot. KPMG’s Costa Mesa office grew employment 11% to 300.
Local managing partner Dean Samsvick said KPMG has made some changes as a result of Sarbanes-Oxley.
“We’ve invested a lot in processes that would help us protect our independence,” Samsvick said. “Our firm has taken the risk and regulatory functions and put them in a stand-alone department.”
No. 4 Paris-based CAP Gemini Ernst & Young LLC grew employment at its Irvine office 45% to 250. The firm finished ramping up its relatively new Irvine space in the past year, moving employees from El Segundo, which accounted for the OC employment gain, according to the company.
CAP Gemini is the largest management-consulting firm on the list.
No. 5 New York-based Pricewaterhouse-Coopers fell three spots with the sale of its consulting unit to IBM. Its Irvine office saw employment shrink 49% to 225.
One of the big gainers was No. 11 Chicago-based Grant Thornton LLP, which moved up seven spots on this year’s list with a 56% jump in its Irvine office to 70 workers. About 10 new workers came from Andersen’s former OC office.
Don Dahl, who heads the Southern California tax practice for Grant Thornton, said the firm is seeing a lot of business from midsize companies.
“The Big Four have taken on a lot of Andersen’s former business, focusing on bigger clients and paying less attention to the middle-market clients,” Dahl said.
No. 14 Seattle-based accounting firm Moss Adams LLP moved up two notches on this year’s list. The firm’s Irvine office reported a 20% gain in workers to 60.
“We’ve seen a lot of growth in our litigation support work,” said office managing partner Chris Schmidt, who expects the Irvine office to boost employment about 10% in the next year.
Another big gainer was No. 19 Brookfield, Wis.-based Jefferson Wells International Inc. in Irvine, which debuted this year. The professional services firm grew its OC workforce 61% to 50.
“A lot of the growth is due to Sarbanes-Oxley’s Section 404,” said Irvine managing director Dave Gennrich.
Gennrich said he’s made a lot of changes since joining the firm several months ago, including growing staff and reducing turnover.
No. 24 Santa Ana-based Profit Recovery Partners LLC was up three spots on this year’s list. The administrative cost reduction company grew employment 40% to 42. The company helps businesses cut costs and expects sales to grow 50% to $6 million next year.
Big OC job decliners included No. 12 McLean, Va. consulting firm BearingPoint Inc., which fell six spots. Its Costa Mesa office trimmed its workforce 28% to 68.
The slower economy was to blame for some of BearingPoint’s job cuts, said vice president Norman Weisinger. BearingPoint was spun off from KPMG.
Debut companies on this year’s list included No. 19 Woodland Hills-based The Goetzman Group. The consultant’s Irvine office grew 67% to 50 workers on the strength of Sarbanes-Oxley compliance work.
No. 49 Newport Beach-based Molnar & Associates LLP is another newcomer. The accounting firm doubled employment to 20 workers as its insurance risk management business took off.
“With the insurance industry the way it is, people are looking for alternatives to deal with their insurance problems,” said partner David Liptz.
