The NJBIZ Interview – Thomas DuffyThomas Duffy is the new managing partner of KPMGÂs Short Hills office, where he supervises the worldwide accounting firmÂs New Jersey operations. Duffy, 46, had most recently been a partner in KPMGÂs Department of Professional Practice in New York City, with responsibility for overseeing the firmÂs compliance with the highest ethical and accounting standards. A graduate of St. PeterÂs College in New Jersey, Duffy joined KPMG as a partner in the Short Hills office in 2002 after a 20-year career with Arthur Andersen. Duffy discussed his new role in the highly competitive New Jersey marketplace with NJBIZ Editor John Greenwald.
NJBIZ: WhatÂs first on your to-do list?
Duffy: The first thing is an assessment of where we are as it relates to the firmÂs three strategic priorities: professional excellence, people and quality growth. Those are the benchmarks and measures that IÂll be using to determine where we are in this practice versus where we might want to be a year or two from now. Having spent the last three years in our national office, I have a fairly good picture from around the firm as to where some of our offices are, and now itÂs getting a little more granular here in New Jersey as I get my feet on the ground.
NJBIZ: What strikes you as particularly unique or interesting about the New Jersey market?
Duffy: New Jersey is a priority market for the firm principally because the business environment in New Jersey lends itself to some tremendous opportunities, and what strikes me about this office is its energy level. It is a very focused and intense office.The teaming between the three disciplines we have in this office is terrific, and so is the communication.
NJBIZ: What do you see as KPMGÂs sweet spot?
Duffy: I think we have two of them. One is called our Focus 100 that is designed to provide those three interdependent services I mentioned to some of the larger companies. That Focus 100 is a Northeast group of companies, many of which are housed here in New Jersey that are targetsÂthat are either our clients or are nonclients that we want to provide our services to. Again, they tend to be on the large side. On a secondary level, we have a mid-market strategy designed to provide services to companies that are either venture-backed up-and-comers, or substantial private companies that have been around a while and have great brand recognition and names that we want to be associated with.
I will mention one other area. New Jersey has quite a few subsidiary branches of foreign entities. We do a tremendous amount of work for global firms in New Jersey that are mostly in Europe.
NJBIZ: What are the three disciplines?
Duffy: They are our audit, our tax and our advisory groups. The ability to bring those three in a complement of about 400 professionals to clients and help them with their business challenges is unique and terrific here.
NJBIZ: How does the office divide the professional staff among the three disciplines?
Duffy: We have a total of 400 professionals, of those about 200 are on the audit side, another 125 are on the tax side and 75 to 80 are on our advisory side. And we have a terrific group of another 35 or 40 support people.
NJBIZ: What challenges does the accounting profession face today?
Duffy: I put this under the category of professional excellence. The biggest challenge for us is to be proactive, sense the needs of our clients and determine whether we have a service offering that can help them meet those business challenges.
NJBIZ: How has the delivery of accounting services changed since the Enron scandal and the breakup of the Arthur Andersen firm in 2002?
Duffy: We on the audit side, and the accounting profession in general, are essentially a regulated entity. We have the PAOB [Public Accounting Oversight Board] that has rules and regulations that we have to follow. So we have had to get used to going from an unregulated industry to a regulated one and a set of rules and regulations that we need to adhere to.
NJBIZ: When did the world change?
Duffy: The world changed in the post-Enron era when the Sarbanes-Oxley Act was passed. That signaled a change in terms of what expectations were for the professional services firm.
NJBIZ: How has the severing of accounting and consulting services affected KPMG?
Duffy: KPMG does not have a consulting arm. In this post-Enron Sarbanes-Oxley world there is a clear definition of services that are acceptable versus unacceptable when you happen to be auditing one of your clients. I think weÂre all very focused on ensuring that we donÂt provide a service that is prohibited to an audit client.
NJBIZ: Is there much competition among the major accounting firms here, or do you all pretty much hoe your own rows?
Duffy: ThereÂs healthy competition between the Big Four and certainly those outside the Big Four that have a reach thatÂs beyond here. One of the cuts that I look at is that because we live in a world thatÂs so global, the competition tends to be among the big firms. But when you look at, for instance, our mid-market strategy, we certainly compete with the non-Big Four firms in trying to solicit work for the up-and-coming companies.