I’d like to anonymously report that Grant Thornton is conducting another round of layoffs, affecting approximately 150 employees, primarily within the tax division. This comes amid broader concerns about the firm’s direction and workforce strategy. All impacted have been notified but this comes less than six months since 350 were laid off surrounding PE deal.

A quick Reddit search to see if we could find anyone talking about layoffs at GT gave us this:

Grant Thornton Layoffs
byu/HarryNobz inAccounting

Alright, confirmed. We should have written this up Friday night, alas did not and WSJ scooped us. It happens. Some details WSJ received:

“Grant Thornton has made targeted staffing decisions to best meet the needs of the clients, markets and industries it serves,” the firm said in a statement.

The affected employees will receive their full salary and benefits through the end of the calendar year and a severance package, Mark Margulies, national managing principal for U.S. tax services, said in a memo to tax staff reviewed by The Wall Street Journal.

The cuts are primarily focused on “meeting market demand and reallocating capacity from where growth has slowed to areas where growth is accelerating,” Margulies said in the memo.

*insert jerk-off hand motion here*

The post-PE deal layoffs referenced by our tipster happened in May. Catch up on that here:

TLDR: In May, two months after the majority sale to New Mountain Capital was announced, GT laid off about 3.5% of the workforce across all service lines. This on top of the three percent they laid off the prior spring and about 200 people axed last November. As far as we know, GT US’s headcount is around 9,700.

Here’s a bit WSJ didn’t report, courtesy our tipster:

Less than a month ago, they sent all of the partners and managing directors to the Bahamas for a firm meeting to celebrate our 100th year of the firm.

Nice. Of course they did. They were probably also celebrating the impending merger with Grant Thornton Ireland, a deal that was backed by — you guessed it! — New Mountain Capital. Allegedly GT Ireland’s 45 equity partners were looking at payouts around €6.5 million ($6.9 million USD) in cash for the GT US deal.

Grant Thornton US had supposedly been waving New Mountain Capital’s money around hoping to have a three-way merger between them, Ireland, and GT UK however GT UK appeared to want nothing to do with this unholy threesome and went with a different private equity firm in their own deal.

According to FT’s sources, Grant Thornton UK was able to get bidding up to approximately £1.3 billion ($1.6 billion USD) in an auction organized by Rothschild, only slightly short of the £1.5 billion partners were hoping for. GT UK revenue for 2023 was £654 million with operating profit of £146 million ($183 million USD). These PE firms have lost their minds.

The Bahamas trip is of course unconfirmed but we wouldn’t be at all surprised. We’ll see if we can dig up more, get in touch if you have anything to add.

Chipman69, you know what to do.

The post Grant Thornton Partners Partied in the Bahamas Before This Latest Round of Layoffs (Allegedly) appeared first on Going Concern.

Thanks Kuya Mike for alerting us to this situation first thing in the morning in such an entertaining way.

HAHAHAHAHAHAHAHAHAHAH @KPMG @KPMG_US YALL SUCK HAHAHAHAHAHAHAHAHAHAH@going_concern https://t.co/EpdKyBEw6g

— Kuya Mike UNHINGED (@KuyaMikeDG) November 25, 2024

What happened, according to NYT:

Macy’s said on Monday that an employee had misstated up to $154 million in delivery expenses over the past few years, forcing the retailer to delay a much-anticipated earnings report that Wall Street uses to gauge the strength of holiday shopping.

Macy’s sales in the third quarter fell 2.4 percent — below analysts’ expectations — to $4.74 billion. The company’s overall sales were dragged down by weak performance at Macy’s stores and its digital business.

Macy’s said it had found the accounting error while preparing its results for the quarter, which ended Nov. 2. The results had been set to be released on Tuesday. An investigation was opened, and the employee, who was responsible for small package delivery expense accounting, is no longer with the company, Macy’s said. The investigation has not identified involvement by any other employee.

KPMG has audited Macy’s since 1988.

In San Jose, PwC insists it didn’t ply a partner with alcohol before said partner crashed his Tesla into a chef at 130 MPH:

A Los Gatos partner for consulting and accounting giant PwC was drunk and speeding on Highway 85 at 130 mph just before his Tesla slammed into the back of a young San Jose man’s car, permanently injuring the 22-year-old chef, a new court filing in a lawsuit over the crash alleged.

Crash victim John Cooper sued PwC partner Ousmane Caba and the company in March, claiming Caba was so drunk he was “barely conscious” when he left San Francisco in June 2023 after a day and night of drinking at events sponsored by PwC.
Caba could not be reached for comment. Messages left for his lawyer were not returned.

PwC, accused in the lawsuit of negligence, did not respond to a request for comment. The company in a court filing last month said evidence produced in the case does not show that PwC paid for “drink after drink” for Caba.

“Instead, it shows that PwC invited employees to two meal events the day before the incident which were catered by others and which included food and beverage selections available to all attendees,” the filing said. “There is nothing vile or despicable associated with offering alcoholic beverages at gatherings in any context, whether business or social.”

That last part doesn’t seem like something a company should say when one of their partners gets trashed and nearly kills someone on the road. But OK, I’m not a lawyer.

EY rolls out ‘metaverse’ avatars, as if video interviews weren’t bad enough already.

A link to the AI-powered avatar, called eVe, is sent out to candidates as soon as they are selected to advance to the interview stage. eVe can answer questions about the company and help candidates prepare for their interview with a real person, according to Francesca Jones, an early careers leader at EY.

The AI avatar, which appears on the screen as a real person would during a video chat, can be spoken to directly and offers verbal answers back within moments, mimicking an actual conversation. It can also be used with text like other chatbots.

In testing, interns grilled the GPT-4 chatbot more than TPTB expected they would:

“I was amazed by the types of questions they asked and how much time they actually spent with it,” Domhnaill Hernon, global lead of EY’s Metaverse Lab, told Business Insider. He suspected the younger generation might spend two to three minutes with eVe and then move on, but they were regularly spending 15 to 20 minutes engaging with it conversationally, asking questions and follow-ups.

One intern who spent 25 minutes talking to eVe went into extreme detail evaluating EY’s compensation benefits, particularly comparing the company’s pension plan to its 401K offering.

Ask it if it prefers waffles or pancakes!

In case you hadn’t heard, PE-backed Aprio is making moves in California.

Aprio, an Atlanta-based advisory and accounting firm, recently purchased Kirsch Kohn & Bridge (KKB) in Woodland Hills to continue its expansion efforts in the region. Terms of the deal were not disclosed.

“Southern California is an economic powerhouse with diverse industries, a robust entrepreneurial spirit and a dynamic business community,” Aprio Chief Executive Richard Kopelman said. “This expansion reflects Aprio’s commitment to building a stronger West Coast presence and serving our clients where they are.”

Aprio previously made moves in San Francisco and Walnut Creek and views this latest acquisition as an opportunity to dig into prominent Los Angeles industries like construction, manufacturing, retail, real estate and professional services.

How’s everyone doing at Aprio these days anyway? Last we heard things weren’t so great. Let us know if you have some scoop on the ground.

PwC makes a Business Insider list of major US companies to slash staff this year. The blurb includes the statement PwC made to BI when the October layoffs were reported in September:

In an emailed statement to Business Insider, Tim Grady, PwC’s US chief operating officer, said, “To remain competitive and position our business for the future, we are continuing to transform areas of our firm and are aligning our workforce to better support our strategy, including attracting and moving the right talent and skill sets to the areas where we need them most. Right now, we are focused on running our business well and adapting to meet the needs of our clients and the rapidly changing market.”

Related:

University of Northern Iowa brags about its CPA exam performance:

Continuing its streak of success, the UNI Accounting program was ranked sixth amongst mid-sized schools for single-pass rates of the certified public accounting (CPA) exam by the National Association of State Boards of Accountancy (NASBA).

This specific ranking doesn’t encapsulate all four sections of the CPA exam that prospective accountants must take, but UNI has submitted all four sections to the NASBA. Out of the top ten institutions ranked in this category, UNI claims the most candidates and the most sections taken by candidates, with 51 candidates completing the CPA and 175 sections total. UNI’s CPA pass rate for the 2023 CPA exam is 78.3%, with the average passing rate being 79.3%.

I really wish I hadn’t thrown away my old CPA exam performance books from the 2010s in a decluttering spree the other weekend because I would have loved to compare 2011 to now. 51 candidates doesn’t feel like much of a brag but to be fair, they did say mid-sized schools.

Across the pond, federal tax changes will mean PwC UK partners will be taking a hit:

Big Four partners think of themselves as more than just employees. The top ranks of the world’s biggest accountancy firms jointly own and manage their firms — and share in its profits at the end of the year. These payouts can run into the millions of pounds each year.

But those rewards will now be hit by the sizeable increase in employers’ national insurance contribution (NIC) announced by Rachel Reeves in last month’s budget.

PwC, the UK’s biggest auditor, is paying an extra £35,000 in employer’s NIC for each of its 1,030 partners. That means that Britain’s biggest auditor will see its tax bill increase by nearly £36 million because of the changes. And, as its partners share in the firm’s profits at the end of the year, they will end up paying for the increased cost eventually.

That’s all I’ve got for today. Grant Thornton layoff story is on deck, I neglected to get to it Friday when tips came in and got scooped by WSJ, ugh. We’ve got some extra details to share though.

Although it’s a holiday, we’re still lurking around so feel free to reach out via email or text if you’ve got a tip.

Happy Turkey Day! Be safe.

The post Monday Morning Accounting News Brief: PwC Denies It Got DUI Partner Drunk; KPMG Misses a Huge ‘Error’ | 11.25.24 appeared first on Going Concern.

Audit

Large Accounting Firms Will Have to Submit Financial Statements to U.S. Regulator [Wall Street Journal]
Large accounting firms will have to submit financial statements annually to the U.S. audit regulator for the first time, among new requirements that have faced pushback from auditors but have received support from many investors The Public Company Accounting Oversight Board on Thursday voted 4-1 to bolster the rules around firms’ reporting annually and for special circumstances, such as a filed lawsuit or private-equity investment. The U.S. audit watchdog also voted 4-1 on a separate rule to require hundreds of firms to publicly disclose a set of eight metrics, ranging from auditor turnover to partner involvement, workload and work experience.
PCAOB news release here: https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-adopts-new-requirements-to-standardize-disclosure-of-firm-and-engagement-metrics-and-to-modernize-the-pcaob-s-reporting-framework

DLA Finance pursues artificial intelligence to pass financial audit [Defence Logistics Agency]
The Defense Logistics Agency deputy chief financial officer is exploring the power of artificial intelligence to accelerate the agency’s path to a clean financial audit. “Although we’re at the beginning stages of using AI in finance, we believe there’s a lot of potential. We’ve already had success with technology such as bots and robotics process automation. We plan to build on that with AI,” Shawn Lennon said. AI can transform DLA’s progress by loading policies, data, process documents and more into a searchable large language model for easy, fast retrieval. The goal is to input data from DLA’s business systems and use AI to detect errors, generate insights, and propose solutions to improve data quality and financial reporting, Lennon added.

Supermicro hot-swaps auditor in hope of dodging Nasdaq delisting [The Register]
Server maker Supermicro has appointed a new independent auditor and submitted a compliance plan to the Nasdaq stock exchange to avoid being delisted amid reports it is losing customers because of uncertainty over its future. The San Jose-based hyperscaler supplier has engaged BDO USA, the American arm of one of the top five global accounting operations, as its auditor with immediate effect. This latest move follows the earlier resignation of Ernst & Young, which previously served as Supermicro’s auditor, over concerns about the company’s accounting practices. The server biz was also more than two months late in filing its 10-K annual report and was at risk of being delisted from Nasdaq as a consequence.

Long Reads

The rehabilitation of KPMG [Financial Times]
At Legal & General’s annual meeting in May 2022, a shareholder took to the floor to air some grievances — not about the performance of the FTSE 100 insurer but that of KPMG, its auditor. “Don’t we as a company with an enormous reputation deserve to have auditors of the very highest reputation too,” he asked the group’s board. Referencing press coverage of KPMG’s multiple audit failings, he also questioned whether L&G should “ditch them and get someone else to do that work”. The remarks generated applause in the room and illustrated the extent to which the reputation of the accounting and consulting firm had been damaged by a litany of scandals in the preceding years.

News

In major victory for AICPA, judge rules against paid overtime for accountants and other professional workers [Reddit]
Sayeth r/accounting, “Fuck the AICPA.”
Most notable comment:
“Apparently the AICPA deleted their anti-overtime advocacy page in the last month but here is the archived version: https://web.archive.org/web/20240831222059/https://us.aicpa.org/advocacy/cpaadvocate/2016/aicpa-reacts-to-dol-overtime-rule EDIT: Here’s a more detailed letter they still have posted- https://us.aicpa.org/content/dam/aicpa/advocacy/issues/downloadabledocuments/aicpa-letter-to-dol-overtime-rule-rin-1235-aa11.pdf“

Billionaire Luksic Family Seeks €217 Million From Santander, PwC [Bloomberg]
Chile’s billionaire Luksic family is seeking €217 million ($226 million) in compensation from Banco Santander SA, PriceWaterhouseCoopers LLP and others in connection to the collapse of a Spanish lender seven years ago. Aeris Invest, a Luxembourg-based financial holding company owned by South America’s second wealthiest family, is demanding the payment to cover losses incurred as shareholders of Banco Popular, after the lender went bankrupt and was taken over by Santander in 2017, according to legal documents seen by Bloomberg.

Trump win, interest rate cuts could spur M&A spike next year: EY [CFO Dive]
Merger-and-acquisition activity could pick up next year thanks to pent-up demand and interest rate cuts, as well as deregulation efforts expected in the incoming Trump administration, according to Ernst & Young’s latest monthly report on deal activity. “With Trump having secured a decisive victory, investors will be weighing the impact his proposed economic and regulatory policies could have,” the report said. “Determining the deal momentum in the longer term will likely depend on how much of Trump’s tax, energy, trade and regulatory agenda is enacted.”

CapRadio releases audited 2024 financial reports, revealing $10M in debt and its repayment plans [CapRadio (Sacramento)]
Capital Public Radio management released audited financial statements for the 2023-24 fiscal year on Thursday, revealing roughly $10 million in debt. CapRadio’s Chief Marketing and Revenue Officer Chris Bruno called the report a “standard annual financial audit” in a media briefing earlier this week. He added that it is the first opportunity for people to review the station’s audited financial data — and its efforts to dig itself out of a major hole — after two previous audits found severe financial mismanagement and significant debt. After an initial audit was released in September 2023 and found significant accounting problems, Sacramento State took over CapRadio’s financial operations. The university worked with the station over the past year to prepare its financial statements for the audit released on Thursday. The most recent financial statements were audited by CliftonLarsonAllen, the same accounting firm which released a forensic analysis of CapRadio’s finances in August. (That report found the station made roughly $760,000 in unsupported payments between July 2020 and June 2023, a large portion of which went to the station’s former General Manager, Jun Reina.)

Talent

Accountants ramp up offshoring to bring down costs [Financial Review]
We’re doomed.
Up to a third of staff at some of the nation’s top accounting firms are located offshore and leaders say the trend will only accelerate as they seek to cut costs and deliver work more quickly. The Australian Financial Review Top 100 Accounting Firms list for 2024 shows countries such as India and the Philippines have become key hubs for preparing the tax returns and financial reports of corporate Australia, including high-level, potentially sensitive work.

A Great Resignation 2.0 is simmering as employees feel overworked and underpaid, forcing them to look for greener pastures [Fortune]
Firms would love for this to be true. The sooner you leave, the sooner they can replace you with 5 Indians.
More people are now mulling their options as they increasingly feel overworked and underpaid amid relentless cost pressures. Employees feel so bogged down by work that far more people are considering resigning now than during the mass resignations we saw in 2022, auditor PwC found in its Global Workforce Hopes & Fears Survey published earlier this year, covering over 56,000 workers worldwide. The report, with nearly half of its respondents being millennial, followed by Gen X and Gen Z employees, found a staggering increase of 28% in the number of people who plan to change jobs, compared to 19% during the Great Resignation in 2022.

Dozens of partners take early retirement from accountancy giant PwC [Sky News]
Sky News has learnt that PwC’s 1,030 UK partners were notified earlier this week that a larger-than-usual round of partner retirements would take place at the end of the year. Sources said the round would involve several dozen partners – who command average pay packages of about £1m – leaving the firm.

Attention firms looking to hire: Check out this week’s Top Remote Accounting Candidates from Accountingfly. You might find your next great hire! If none of these professionals tickle your fancy, sign up for Always-On Recruiting to get a fresh batch in your inbox every week.

Law & Order

Broward tax preparer used credit card fraud scheme to steal from seniors: AG [6 South Florida]
A Broward tax preparer is facing dozens of charges after authorities said he ripped off seniors and others by using their personal identification to open credit card accounts. Ricardo Karns, 38, was arrested by the Broward Sheriff’s Office Wednesday on 41 charges including money laundering, organized scheme to defraud, grand theft and criminal use of personal identification, jail records showed.

Charlotte repairmen plead guilty to $1.5M+ in tax fraud: DOJ [Queen City News]
Court records stated that from 2018 through 2021 both men worked as home repairmen and provided car repair services to elderly customers. The two men received over $1.5 million from customers and failed to report the income on tax returns. They did various jobs ranging from roofing to driveways.

Ex-Employee Says BDO Fired Him in Retaliation For Fraud Concerns [Bloomberg Law]
A former employee has sued BDO USA PC in federal court alleging retaliation in violation of the New York Labor Law and defamation. Cornel Lupu alleges that during his employment as a managing director at BDO, he uncovered fraudulent billing practices within the company’s unclaimed property practice. He reported his concerns about these practices to his supervisors, but they were dismissed, his complaint, filed in the US District Court for the Southern District of New York, says.

Ex-PwC Partner Blames Tax Scandal Fall-Out on Leaders’ Failures [Bloomberg Tax]
A former Pricewaterhouse Coopers Australia tax partner has hit back against a claim brought by the firm which alleged he was responsible for the tax scandal that has plagued PwC for two years. It’s the latest in a legal fight between Paul McNab and PwC over post-termination payments denied to him, which was filed in the New South Wales Supreme Court in January. PwC’s cross-claim in the case, filed Nov. 14, alleged McNab caused “identifiable loss and damages” for the cost of investigations and inquiries into the leaking of confidential government tax information, “and the loss of all value in PwC’s government business which was sold to private equity fund Allegro Funds in a $1 distressed sale”. PwC’s cross-claim alleged the damage McNab caused the firm outweighed any partnership payments it may owe him.

AI

KPMG Invests $100M in Google Cloud Alliance to Accelerate Enterprise Adoption of AI for Clients [KPMG]
KPMG LLP and Google Cloud today announced a major expansion of their U.S. alliance focused on advancing generative AI, data analytics, and cybersecurity among Fortune 500 companies and global enterprises. KPMG will make a landmark $100 million investment in its Google Cloud practice, which KPMG estimates will drive $1 billion in incremental growth for the firm. Bookings for KPMG’s Google Cloud practice have increased by 10x in the past two years.

Bryant launches PwC AI in Accounting fellowships with $1.5M investment [Bryant University]
Bryant University announces the launch of the PwC AI in Accounting Fellowship program, funded by a $1.5 million investment from accounting firm PwC US and its partners who are Bryant University alumni. This cutting-edge experiential learning initiative offers undergraduate students a unique opportunity to explore the transformative impact of artificial intelligence on the accounting profession.

Academia

One CPA’s Experience in a Doctorate in Business Administration Program [CPA Journal]
In this personal reminiscence, one accounting professor recounts her journey from public accounting into academia. Rather than taking the usual PhD, she took the sometimes overlooked path of a Doctorate in Business Administration (DBA). Her story shows that there is more than one way to answer the call to impact: CPAs who want to make a difference have more than one option available.

The post Friday Footnotes: PCAOB Demands More Tedious Paperwork From Firms; PwC Partners Retire Early; KPMG Redeems Itself? | 11.22.24 appeared first on Going Concern.

ELE is one of several initiatives The Powers That Be have launched in response to the decline in CPA candidates that’s been underway since numbers peaked in 2016.

There is typically a flood of candidates ahead of major exam changes (like CPA Evolution that dropped at the start of this year), you can see this in the chart above as candidate numbers swelled in 2010 ahead of the large CBT-e change in 2011. However, Surgent’s Liz Kolar said in late 2023 that her CPA review company was “seeing more of a ripple than a tsunami this year.” Uh-oh.

Journal of Accountancy said in April that the ELE program had 38 participants. In a recent announcement, NASBA says ELE now has 105 students enrolled for this fall, representing more than 50 employers.

This is the list of ELE-registered employers as of October 2024:

Notice who is suspiciously absent from the above list: the four firms that employ the most accounting graduates on the planet. EY has its own 150-hour alternative called the EY Career Path Accelerator while PwC launched a pilot program with St. Peter’s University in New Jersey to offer a “work for credit” situation for their CPA aspirants.

Registration for the ELE’s spring 2025 semester is currently open until Jan. 1, 2025 and, as mentioned above, is now open to any accounting graduate who is “earning a paycheck from an employer not associated with the program.”

Here’s what NASBA said in their announcement:

“While we designed the program for accounting graduates and entry-level professionals, it’s gratifying to see participants from a diverse range of states, age groups, gender and ethnicities,” said Mike Decker, AICPA’s vice president of CPA examination and pipeline. “That’s a testament to the enduring value of the CPA credential, from the newest graduates to mid-career professionals.”

The ELE program is for individuals who have completed their bachelor’s degree and core accounting classes but possess fewer than the 150 credit hours required for licensure. Here’s how the program works:

• Full-time, employed accounting graduates can either join through an ELE-affiliated employer or sign up on their own.
• Program participants earn up to 30 university credits through online courses, and credit-hour costs are set at highly affordable rates.
• Participating employers are expected to support their employees, examples of which may include, but are not limited to:
  • flexible work schedule
  • tuition reimbursement
  • mentoring to help program participants work toward their CPA license
• The program is open to all employer types, including not-for-profit, businesses and government entities.
• Accounting graduates who sign up on their own rather than through participating employers may not necessarily have the same support or mentoring opportunities as those who have direct sponsorship.

IDK, this is smelling a little desperate no? 105 is 0.16% of the 67,336 people who sat for the CPA exam in 2022. Really making a difference there, guys.

Dear reader is invited to weigh in on the Experience, Earn & Learn program or any other pipeline initiative in the comments or via email.

The post The Powers That Be Are Getting Desperate For People to Do This Experience and Learn Thing appeared first on Going Concern.

Wrote FT of GT UK’s deal:

Grant Thornton UK, the country’s sixth largest accounting firm by revenue, has agreed to sell a stake to the buyout group Cinven, marking the most significant private equity investment to date in the UK accounting sector.

Cinven beat rival offers from other private equity groups including Sweden’s EQT, and from Grant Thornton’s sister firm in the US, which had proposed a transatlantic merger.

Specifics of the deal are not known at this time and the firm told FT in a statement that the terms “remain confidential.” FT said a source told them bidding for the firm in an auction organized by Rothschild had reached approximately £1.3 billion ($1.6 billion USD), a little short of the £1.5 billion partners were hoping for. For fiscal 2023, GT reported revenue of £654 million (growth of +7%) and operating profit of £146 million. Wait, is that right? And they were able to get private equity to bid up to £1.3 billion? Send those Times shills a nice Edible Arrangements bouquet for their hard work.

“Having evaluated the external landscape, we have agreed initial terms with an investor, who we feel is best placed to support our accelerated growth in the medium term,” said GT to FT.

The deal isn’t official quite yet, Grant Thornton’s 200-some partners still have to ratify it.

It seemed pretty clear when Grant Thorntons US and Ireland announced a merger a few weeks ago that the UK business was not joining them in the mid-tier threesome floated as a possibility back in July. The GT US/Ireland deal was assisted by New Mountain Capital, the private equity firm that bought a majority stake in GT US in March. Apparently GT Ireland’s 45 equity partners were looking at payouts around €6.5 million ($6.9 million USD) in cash for the GT US deal.

This is really starting to feel like 1999 except instead of Pets.com and dudes on motorcycles who can deliver condoms and DVDs within an hour it’s professional services firms. What could go wrong!

The post Grant Thornton UK Picks Private Equity Over Merging With Its US Cousins appeared first on Going Concern.

On Friday, we prompted the readership to speculate about which mid-tier accounting firm was going to announce a private equity investment on Monday after a Reddit post teased an imminent announcement. Our money was on Carr, Riggs, & Ingram and a tip that came in shortly after publication confirmed that suspicion.

Imagine our surprise when the first press release of Monday morning wasn’t CRI but PKF O’Connor Davies. PKF announced they were getting cozy with Investcorp and Public Sector Pension Investment Board, one of Canada’s largest pension investment managers.

Was our intel wrong? No! CRI just hadn’t gotten around to announcing their deal first thing Monday morning. More like first thing Monday afternoon.

Like PKF, CRI struck a deal with not one but two outside capital firms:

Centerbridge Partners, L.P. (“Centerbridge”), a global alternative investment manager with approximately $40 billion in assets under management as of September 30, 2024, and a focus in the financial services, technology, industrial and healthcare markets, and Bessemer Venture Partners (“Bessemer”), a venture capital firm with more than $18 billion in assets under management primarily invested in the consumer, financial technology, enterprise, and healthcare markets. This first-time investment of institutional capital for CRI recognizes the firm’s exemplary track record of growth and creating value for its clients and is intended to help accelerate the firm’s innovation initiatives and expansion strategies.

The private equity deals in accounting are coming so fast they’re dropping on the same day now. WHO’S NEXT?

Earlier:

The post Private Equity is Picking Up Accounting Firms By the Handful Now appeared first on Going Concern.

Was the mid-tier firm about to announce a private equity deal discussed last week PKF? Because they announced this morning.

PKF O’Connor Davies (“PKFOD”) (“the Organization”), one of the nation’s largest accounting, tax and advisory practices, is pleased to announce a strategic growth investment from Investcorp, a leading global alternative investment firm, and Public Sector Pension Investment Board (“PSP Investments”), one of Canada’s largest pension investment managers. This transaction represents a significant milestone for PKFOD, adding two experienced investors that will help fuel growth and expand service offerings to enhance the overall client experience.

The Pentagon has failed the 7th audit in a row:

After the close of business Friday night, the Pentagon released the findings of its fiscal 2024 annual audit. And for the seventh consecutive year, it has failed, though claiming incremental improvements.

“This result was not a surprise, and I know that on the surface it doesn’t sound like we’re making progress. However, that is not the case,” Michael McCord, the Department of Defense Under Secretary of Defense and Chief Financial Officer, told reporters today. “I believe the department has turned a corner in its understanding of the challenges, and more importantly, in addressing those challenges, momentum is on our side.”

Here’s the DOD discussing it directly.

To date, the only military branch to ever receive a clean audit opinion is the Marines and only the one time (so far).

TIL Trump AG pick Matt Gaetz has a wife who works at KPMG:

Despite Matt Gaetz’s scandal-plagued background, he stands poised to assume one of the most prestigious positions in the federal government. President-elect Donald Trump tapped the former Republican congressman to serve as U.S. attorney general in his second administration, a decision that shocked politicians from both parties. One of the loudest cheers for the decision came from Gaetz’s wife, Ginger Luckey Gaetz; on her X (formerly Twitter) account, she wrote, “Attorney General will look good on you my love.”

Married to Gaetz since August 2021, Lucky Gaetz is proud to be both a “wifey” and an accomplished analyst for KPMG, a major multinational accounting organization. Success runs in her family: She’s also the sister of Palmer Luckey, who became a billionaire thanks to Facebook’s acquisition of the virtual reality company he founded. Luckey Gaetz is a committed Christian who references Bible passages in her social media profiles; when her husband was named AG pick, her X reaction was simply “God is good.”

A little tidbit from The Australian Financial Review Top 100 Accounting Firms list for 2024:

Accounting firms that use artificial intelligence grew an average of 50 per cent faster than firms that did not report using the technology.

Senator Joni Ernst (no relation to Ernsts Alwin C. and Theodore, we assume) is still on the hunt for naughty IRS employees, reports Washington Examiner:

Over 800 Internal Revenue Service employees still owe millions in back taxes despite heavy criticism from Sen. Joni Ernst (R-IA), who is hoping the level of tax waste will be squashed by billionaire Elon Musk, the newly tapped co-leader of the Department of Government Efficiency.

In a letter to the Iowa senator sent on Nov. 8 and shared exclusively with the Washington Examiner, the IRS noted that of the 2,044 employees who reported having balances totaling more than $12 million, 860 employees still have not paid overdue taxes. Only 20 of the 70 employees who “willfully evaded” paying their taxes were removed.

“We haven’t seen a tax revolt like this since the Boston Tea Party,” Ernst said in a statement. “If hardworking Americans dodge taxes, they are faced with steep fines and imprisonment, but it appears that tax collectors in Washington believe those rules are for thee but not for me.”

Earlier:

A Deloitte survey reveals that almost half of Americans headed on holiday this season will be doing some work while they do:

About 49% of employed travelers are “laptop luggers” — those who plan to work at some point on their holiday vacation — up from 34% last year, according to the Deloitte holiday travel survey.

This flexibility allows workers to take trips they might not otherwise, or stretch their trips for longer, according to the survey.

While there are more laptop luggers across most age groups and income levels, Gen Zers, which Deloitte defines as those born between 1997 and 2012, and high earners make up the highest shares, at 58% and 52%, respectively, according to the survey.

fLeXiBiLiTy

In another Deloitte survey we hear from young people who care less about the environment and more about being able to pay the fucking rent:

Deloitte surveyed a weighted sample of 300 people aged 20 to 29, and 200 people aged 30 to 41.

Personal financial stability was the top concern for respondents, overtaking climate change. Fears of terrorism, war or sexual harassment also ranked higher than climate change among top concerns for Millennial and Gen Z.

Among Gen Z, 44% find stress levels at work too high, compared to 59% of Millennials.

Sal Melilli, Partner with KPMG Private Enterprise, will be ringing NASDAQ’s closing bell this afternoon to celebrate the 2024 KPMG Private Enterprise Global Tech Innovator Competition and National Entrepreneur’s Day.

That’s all I saw of note floating around out there in the accounting news sphere this morning. If you see something interesting, have a tip, or just want to vent do feel free to email or text. All tips are anonymous.

Have a great week!

The post Monday Morning Accounting News Brief: Way Too Many People Working on Vacation; PKF Does a PE Deal | 11.18.24 appeared first on Going Concern.

Long Reads

Deloitte held close ties to a now-sanctioned Cyprus firm accused of shielding oligarchs’ wealth, records reveal [International Consortium of Investigative Journalists]
In March 2023, amid a wartime clampdown on secretive Russian financial networks around the world, the accounting giant Deloitte publicly denied having any recent affiliation with an obscure financial firm in the Mediterranean republic of Cyprus. The firm, MeritServus, was on the verge of being sanctioned by British authorities for helping hide assets tied to a key billionaire close to Russian President Vladimir Putin. “Since 2005, MeritServus has not been part of, or affiliated with, Deloitte Cyprus or any other Deloitte firm,” the accounting firm told The Guardian. Deloitte had good reason to make the statement: MeritServus had started as a division of Deloitte in Cyprus and was now coming under intense scrutiny from media and regulators. But Deloitte’s statement masked more than a decade of the two firms’ official business relationship, according to corporate filings in Cyprus and leaked email exchanges.

What we now know about large accounting firms, and what we don’t [The Mandarin]
The accounting profession is currently the focus of lawmakers trying to work out how best to legislate to improve professionals’ behaviour and minimise harm to the community following PwC Australia’s much-publicised breach of confidentiality almost a decade ago. The PwC tax leaks saga that blew up in January 2023 has seen a revisitation of old debates about the accounting profession, management of conflicts of interest, government consultation with experts, breaking up or refashioning business structures, and defining what firms can do for audit clients. What anyone without a sense of history needs to appreciate is that the world’s toughest regulators have tried to tackle these issues for years. There are no easy solutions.

Audit

Is Anyone Crazy Enough to Audit Super Micro Computer? [Wall Street Journal]
Super Micro Computer’s stock has been in a tailspin since Ernst & Young dumped the company as an audit client about a year after it replaced Deloitte & Touche. If EY found something that Deloitte missed then the situation could get even trickier for the server maker that once seemed unstoppable. There are enough red flags that Deloitte should be trying to find out what happened.

The Profession

The problems PE solves [Accounting Today]
Accounting Today is just full on jerking off private equity now. This will age like milk:

Firm Watch

Cover & Rossiter ‘goes big’ with Bonadio merger [Delaware Business Times]
Cover & Rossiter offers audit, tax and trust services as well as financial planning to clients as well as accounting services to small to medium businesses. Holliday said that joining Bonadio Group is a natural progression for the firm to evolve as accounting firms faced headwinds during the COVID-19 pandemic. When Paycheck Protection Program (PPP) loans and Emergency Injury Disaster loans (EDIL) were issued to thousands of businesses in the state, Cover & Rossiter had to quickly rise to meet the needs to ensure the paperwork was on point. “When the pandemic hit, the pressure was really on and we had to rapidly pivot to deal with those programs and, as a smaller firm, we didn’t necessarily have the bandwidth,” MD Marie Holliday told the Delaware Business Times. “I also feel there’s a shortage in accountants, as we compete against banks and trust companies, so it got harder over time to keep talent. With artificial intelligence coming in, it became clear we couldn’t handle this on our own. So we thought, ‘We have to go big or go home.'”

Aprio Expands to Southern California with Addition of Kirsch Kohn & Bridge [PR Newswire]
Aprio announces its expansion to Southern California with the combination with Kirsch Kohn & Bridge (KKB), located in Woodland Hills, Calif. Effective November 1, 2024, KKB joined Aprio, adding five partners and more than 30 professionals.

Accounting firm KSM announces move to new nearby office [IBJ]
Katz Sapper & Miller—the largest accounting firm in Indianapolis—plans to relocate to a new office in mid-2026 in a move that KSM says represents its embrace of post-pandemic work habits. “I think there’s a benefit to being in the office, and the purpose of the design is to enhance the office experience,” CEO Tim Cook said. “We’re trying to create space that reflects how we work today, versus maybe how we did five or 10 years ago.”

Talent

Attention accounting employers: If you need talent, you need to check out Accountingfly’s top remote accounting candidates of the week. If you don’t like any of these, sign up for Always-On Recruiting to get a fresh batch in your inbox every week. It’s FREE!

Chicago’s largest accounting firms see decreasing headcounts among major players [Crain’s]
Crain’s pinned this on the accountant shortage but anyone with half a brain knows that’s bullshit. Kindly do the needful and show us how much work these firms are shipping overseas.
The largest accounting firms in the Chicago area, which are ranked by local professional staff as of June 30, barely saw an increase in numbers from 2023 to 2024. These firms saw median growth of less than 1%. The top 25 firms didn’t see much of an increase in local certified public accountant, or CPA, headcounts either, with median growth hovering slightly above 0%.

Addressing the talent shortage in the accountancy profession: Singapore’s strategic initiatives [FutureCFO.net]
The accounting industry in Singapore is experiencing a talent shortage. This is exacerbated by the rapid pace of technological advancement that demands a workforce skilled in both traditional accounting practices and new digital tools. To address these challenges and come up with strategies to ensure a robust pool of accountancy talents, the Accounting and Corporate Regulatory Authority (ACRA) with the support of Singapore’s Ministry of Finance (MOF) has set up the Accountancy Workforce Review Committee (AWRC) in 2022. After 48 meetings and focused group discussions (FDGs) amongst over 300 participants, AWRC has come up with a report highlighting recommendations to build a quality and sustainable talent pipeline for the accountancy profession.

ESG

66% of Young Professionals Feel Responsible for Driving ESG Initiatives: KPMG Report [ESG News]
A recent KPMG International report, Leaders 2050, reveals that young professionals worldwide are feeling disempowered in supporting their organizations’ climate goals. The survey, involving over 800 young people aged 18 to 35 across 48 countries, indicates that while 66% of respondents feel responsible for driving Environmental, Social, and Governance (ESG) impact, only 10% feel they have the autonomy or empowerment from leadership to act effectively.

Only 41% of Global Companies Have a Published Climate Transition Plan: EY Report [ESG News]
The 2024 EY Global Climate Action Barometer reveals that while climate disclosures have improved significantly over recent years, urgent action remains lacking among companies to combat the intensifying climate crisis. Despite an increase in disclosure coverage to 94% and a quality score of 54%, this growth is not sufficient to align with the global climate agenda.

Fraud

West Fargo woman accused of stealing nearly $830K from Fargo employer [KFGO]
According to court records, Mary Peterson was in charge of making cash deposits for Lunde Auto until she was fired in 2022. Her firing came after the general manager learned she had embezzled nearly $830,000 over seven years. The theft came to light in January 2022 when the company’s accounting firm realized a large amount of money was missing from a bank account. An accountant suspected Peterson was stealing from the company after an email exchange with her over a $450 discrepancy.

The post Friday Footnotes: Oh Good, Another Talent Taskforce; A Little Firm Goes Big; Deloitte Being Shady!? | 11.15.24 appeared first on Going Concern.

On Tuesday, National Taxpayer Advocate Erin Collins said at the AICPA & CIMA National Tax Conference that the IRS “has to deal with it,” “it” being the large backlog of ERC claims the agency is processing at a snail’s pace for fear of letting fraudulent claims slip through.

Said Journal of Accountancy of her comments at the conference:

The claims involve “a lot of good taxpayers in there that are entitled to this money,” she said. And the Taxpayer Advocate Service, which Collins heads, can get involved when a businessperson has a hardship, she said, such as a client who needs to pay their rent or car payment or needs money for food.

“We get a lot of people reaching out to us and saying, ‘I mortgaged my home because I thought I was going to get this ERC money so I could keep my business afloat. I need to pay this off. The interest is killing me.’ Or ‘I paid my employees out of my assets to keep them on the roll. I need this money back.’ I’ve had people saying they’re possibly going to shut down. They’re going to have these challenges so we are trying to help those individuals, and it is not as fast as I would like.”

ERC was initially created at the onset of the COVID-19 pandemic to encourage businesses affected by lockdowns to retain staff on payroll. Recent IRS estimates say there could be $9 billion of fraud related to various COVID measures, including but not limited to ERC. Tax pros we’ve spoken to say it’s likely a lot higher.

Shortly after the package of relief measures under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) rolled out, a cottage industry of aggressive promoters with the work ethic of extended car warranty salesmen popped up. The promoters would take a fee based on the expected ERC payment — sometimes as much as 40% — while the business owner waited around for the actual payment. As we know, many of those business owners are still waiting. A bunch of them can be found on Reddit at r/ERCchat.

Here’s CPA Larry Gray explaining more about this scheme that caused the IRS to issue a moratorium on processing ERC claims in 2023:

In September, U.S. Senators Mitt Romney (R-UT), Thom Tillis (R-NC), and Joe Manchin (I-WV) introduced the Employee Retention Tax Credit Repeal Act, bipartisan legislation that would disallow the processing of Employee Retention Credit claims filed after January 31, 2024. Estimates suggest the credit has added $230 billion to the deficit through Fiscal Year 2023 and could eventually cost up to $550 billion. The IRS’ own analysis of more than one million backlogged ERC claims shows that only 10-20% are low risk — meaning likely legitimate — while 60-70% have unacceptable risk and 10-20% are in the high risk category. The agency said the total value of these analyzed claims is over $86 billion.

“This is not a five-minute exercise,” acknowledged Collins in her comments to the AICPA & CIMA National Tax Conference. “We’ve made various suggestions and recommendations [to the IRS], but, as you can see, they aren’t moving fast.”

Taxpayer advocate: Unprocessed ERC claims could total 1 million at year end [Journal of Accountancy]

The post Taxpayer Advocate Advocates For Paying Out Low Risk ERC Claims Already appeared first on Going Concern.

Put on your tallest wading boots and let’s see the press release:

“We could not be happier to add a firm like Clearview Group to the Citrin Cooperman family. Clearview Group’s ability to expand our service offering and offer up-market solutions to our client base will allow us to continue to help our clients Focus on What Counts,” said Citrin Cooperman Advisors LLC CEO Alan Badey. “Clearview Group’s focus on a strong culture and technical excellence will fit perfectly with Citrin Cooperman.”

“We are thrilled to be joining Citrin Cooperman,” said Brian Davis, CEO of Clearview Group. “With Citrin Cooperman’s expansive geographical presence and impressive suite of world-class professional services and industry insights, this transaction enables us to expand the reach of our industry-leading risk and enterprise solutions to continue to provide clear solutions to the complex problems large corporations are facing in today’s ever-evolving market conditions.”

New Mountain Capital — the same PE firm that is pouring cash into Grant Thornton — has owned a majority stake in Citrin Cooperman since 2022.

Let’s check out Glassdoor to see salaries at Clearview Group shall we?

Because modern day PE-backed deals are extra complicated, Citrin Cooperman Advisors LLC will acquire the non-attest assets of Clearview Group, Inc. while Citrin Cooperman & Company, LLP will acquire the attest assets of BD & Co., Inc., Clearview’s licensed CPA firm.

The press release says the transaction is expected to close November 2024 so…any day now.

Related:

The post PE-Backed Citrin Cooperman Adds a 150-Person Firm to the Roll appeared first on Going Concern.

With all the election noise of the last week or two we almost missed this: RSM sent orders down from on high to get tax people back in the office. We don’t know if other service lines have received similar orders but were told that all functions are trying to get more people in the office.

In an email reviewed by GC, leadership requested — rather, strongly advised — a minimum of three days a week in the office or at a client site. “Being face-to-face with our teams and clients is essential,” said the email sent out by federal specialty tax leader Dave Kautter. “We ask that you ensure you’re spending at least three days in the office with your people and/or visiting clients and prospects in person. I leave it to each of you to determine what days work best for you and your teams to be together.”

In addition, senior managers were reminded of their duty to train up their future replacements. IN PERSON. “With new colleagues, fall and winter interns, and your existing teams, we’ve talked about the importance of being together,” the letter said. “But we must make the most of working side-by-side with our people.” Right. Just being in proximity of

RSMers must be slipping on their tedious paperwork game because the email also reminded recipients that their work “is a balancing act with equal parts client service and operational tasks.”

“I’d like you to work with your teams and TFLs to identify your target client and prospect visits for the coming months and the operational responsibilities (e.g. billing, scheduled billing, off-strategy clients, SOWs/CLEAR, etc.) you must complete,” said Kautter. “We are a team and we must work together to succeed. Ensure all of your people are contributing to the tasks at hand.”

We suspect this bit at the bottom is a big reason why the firm is pushing these people to get into the office elbow-to-elbow with the impressionable associates and senior associates:

Meeting these expectations, I know we will be well-positioned to capitalize on this moment and demonstrate our roles as first-choice advisors. The U.S. election is behind us and we can expect a flurry of middle market activity with clients looking to us for guidance on tax policy. Let’s show up for them together.

As you may recall, RSM laid off 3 percent of its workforce in September. As far as we know these cuts were limited to audit and consulting. On October 11, RSM US announced it would be merging with RSM UK to “establish a partner-owned multinational organization dedicated to delivering quality, globally integrated services for the middle market.”

Get that bag, RSM.

If anyone has info on other service lines being called back to the mothership get in touch.

The post RSM Tells Tax People to Get Back in the Office Three Days a Week appeared first on Going Concern.

Deloitte is the first company in Australia to be recognized as a “menopause friendly” workplace:

The accreditation was issued by Menopause Friendly Australia, an offshoot of a UK-based advocacy and advisory organisation which has now launched locally to bring attention to a subject which is still all-too-often ignored.

Deloitte received the badge following a thorough evaluation of its workplace initiatives across five global standards, deemed to have created a “supportive, inclusive, and accommodating environment” for those contending with the natural process.

“We know that menopause and its symptoms can disrupt the ability of our people to thrive in the workplace,” stated Pip Dexter, who has ushered in several major reforms during her time as Deloitte’s chief people & purpose officer. “Because it has largely been a taboo topic until recently, many women fear that disclosing reproductive health issues may negatively impact their careers.”

This is definitely worthy of a deep dive.

Things appear to be turning around at KPMG UK with the firm finally adding some new equity partners:

KPMG has promoted employees to its top ranks for the first time in four years in a bet that demands for its professional services will grow after fighting a sector-wide slowdown.

The Big Four firm has added 42 new “equity partners”, who jointly own and manage the firm, having shrunk the number of partners to a fraction of the size of its competitors.

It is thought the promotions have boosted the size of KPMG’s partnership to more than 500 after its numbers fell to their lowest level since 2002 earlier this year. While it has not promoted internally to its top ranks, it has hired some outsiders to join its partnership.

PwC Australia will be handing over some money to jilted ex-partners, reports AFR:

PwC Australia has entered into settlements worth millions of dollars with two of the eight partners forced from the firm over allegations they were involved or did not adequately address the firm’s tax leak scandal or failed to meet their professional responsibilities.

One of the settlements, worth about $2 million, is with Wayne Plummer, a former senior PwC corporate tax partner and leader of the firm’s tax risk and quality team, according to a source familiar with the arrangements but not authorised to speak about the settlements.

Earlier: Fuel Up the Bus, PwC Australia Has Named and Shamed Eight Partners Tied to the Tax Leak Scandal

After six decades of serving clients, PwC is pulling out of Fiji and forcing its partners to pretend like they’re excited to be working for Grant Thornton instead:

GLOBAL accounting “big four” firm PwC is pulling out of Fiji after 60 years of offering support across Audit & Assurance and Tax services to multiple industries.

In a statement issued this week, the Fiji firm revealed they were parting ways amicably and that it will now join the Grant Thornton network from next month.

“My colleagues and I are delighted to be joining the Grant Thornton network. The Grant Thornton network is located in over 140 markets globally, with over 70,000 people and generates revenues in excess of $US7 billion per annum,” PwC Fiji’s senior partner Jerome Kado said.

“We remain fully committed to providing high quality work to our clients and stakeholders.”

EY bought an HR tech consultancy:

Ernst & Young LLP (EY US) announced today that Jubilant, an award-winning HR technology consultancy focused on implementing and supporting human capital management, payroll and workforce management systems, has joined EY US to further bolster our capabilities in this fast-growing market.

With more than 50 professionals focused on HR technology services, Jubilant has differentiated itself in the market by designing and building accelerators that automate testing for payroll and workforce management, and by delivering advanced tools for data movement, analysis and validation.

Seems the firm is on a buying streak of late. Last month EY announced it would acquire Dignari, LLC, “a woman-owned leading technology consulting firm specializing in digital identity and access management (IAM) solutions.”

In India, an audit manager at EY who divorced her husband after he lost his job sent a legal notice after she saw his fancy new car on social media:

Cut to four years [after divorce], the woman has sent a legal notice demanding Rs 2 crore after he bought a Mercedes C200 and posted a picture and video of it on his social media platform.

Taking to his X handle, the man shared, “My ex-wife (Currently Audit Manager in EY) divorced me when I lost my job after torturing me. A proper MOU was done & money I gave. After 4 years of divorce, I bought a Mercedes C200 & posted a pic on FB. She sent a legal notice demanding 2 crore the same week. This is their nature.”

He also shared a video of his old vehicle and shared, “I bought this Tata Nano XTA which we had when I was married. I lost my job and she became impatient and divorced me after getting money.”

She #divorced him when he lost his job.

4 years, when she knew that he bought a #Mercedes from FB page, she sent a legal notice asking for 2 Crore.pic.twitter.com/BoO5SL5F60

— ShoneeKapoor (@ShoneeKapoor) November 8, 2024

As if you need another reason to hate HOAs:

A former accountant of the Hammocks Home Owners Association has been arrested amid the years-long investigation into the alleged massive theft of funds from the HOA, prosecutors announced Friday.

Jesus Cue, 63, was arrested on charges including racketeering, money laundering, grand theft, unlawful compensation, organized scheme to defraud and fraudulent use of personal identification information, the Miami-Dade State Attorney’s Office said.

Cue and his company acted as a controller/accountant consultant for the HOA board from October 2018 to November 2022, receiving $644,000 in [fake] vendor payments during that time.

This is not the beginning of a joke…

Under the roof of a small kiosk in front of a shelter for the displaced west of the Nuseirat refugee camp in the central Gaza Strip, three young men gathered one morning in July to prepare falafel and sell it to the displaced people around them.

Small falafel kiosks have sprung up all around Gaza over the past year to cater to the hundreds of thousands of displaced people. This one, though, gained fame – not just for its falafel, but for the story that unites the three young men who run it.

Told ya there wasn’t much going on. Please, I beg you, let me know via email or text if you see anything interesting happening out there. Bye!

The post Tuesday Morning Accounting News Brief: PwC Pulls Out; KPMG Finally Promotes Some Partners | 11.12.24 appeared first on Going Concern.

The Big Story

PwC scandal triggers big split risk for consulting giants [Sydney Morning Herald]
The global consulting firms that dominate Australia’s corporate and government sector could be forced to operationally separate their audit business to avoid conflicts and open up to greater financial scrutiny under proposals recommended by a parliamentary inquiry triggered by the PwC tax scandal. The report also recommends that these private firms be limited to 400 partners, and that they be prevented from offering both audit and non-audit work – like consulting services – to the same client. This would be a big blow for firms such as PwC which, in 2022, received more than $79 million in fees from Macquarie Group alone. “This report is the legacy of the PwC tax leaks scandal, and the sector-wide misconduct that was uncovered in the aftermath,” Senator Deborah O’Neill, chair of the parliamentary joint committee on corporations and financial services, said after the report was released.

PwC accused of interfering in Australian tax leaks probe [Financial Times]
PwC has been accused of interfering in Australia’s political and regulatory affairs after documents revealed the Big Four accounting group warned its local firm against co-operating with investigations into a damaging tax leaks scandal without permission. The Australian Senate published documents on Friday that included a letter from Diana Weiss, PwC’s global counsel, sent to PwC Australia last year. She wrote that the local firm needed to comply with a set of remedial actions or face suspension, or expulsion, from the global network.

Firm Watch

National accounting firm quadruples Boca Raton office size [South Florida Business Journal]
“As we expand our presence in the South Florida market, the new office allows us to better support our growing client base, which generates more than $15 million in local revenue,” said Russell Goldberg, partner-in-charge of Withum’s Florida regional offices. “The expanded space also lets us bring together a dedicated Withum team who are committed to serving the community and building connections within it.” The new office will employ a team of 15 by the end of the year, with all positions in the Boca office staffed by accounting professionals, Goldberg said. “Our team will continue to grow as we strengthen our South Florida operations,” he added.

Fruci & Associates embraces flexible schedules as recruiting tool [Spokane Journal of Business]
To support a flexible workforce, Fruci & Associates has allowed current and potential employees to set their own hours. Many accountants at Fruci work between 40 and 45 hours per week even during the busy season, which is known to demand upward of 70 to 80 hours from accountants. Others work 50 hours per week and some even as low as 30 hours, MP Kemper Rojas says. “It made recruiting a lot easier,” Rojas says. “We’re still getting a lot of recruits who are remote and coming from the big firms who are just burnt out. They don’t even have time to sit for their CPA exam because they’re working so many hours.”

Experienced technology and digital transformation leader Michael Kempe joins Grant Thornton as CIO [Business Wire]
Prior to his new role with Grant Thornton, Kempe spent 12 years at KPMG LLP in various senior technology leadership roles, including regional and international CIO. In these roles, he focused on driving revenue growth and increasing operational efficiencies through large-scale digital transformation programs leveraging innovative Cloud and AI solutions.

Talent

Attn accounting employers: your talent woes are over! Check out this week’s top remote accounting candidates from Accountingfly and start filling those empty (virtual) chairs today.

Sign up for Always-On Recruiting to get a fresh batch of candidates for hire in your inbox every week. It’s free!

Municipal Messes

Delayed audit finds ‘material weaknesses’ in Elton’s finances and procedures [KPLC (Louisiana)]
The town agreed to address such deficiencies including timely adopting an operating budget, hiring someone qualified to prepare financial statements, and submitting required paperwork to the Legislative Auditor’s Office by the due date. However, the town claims it is not able to act on one of the recommendations by auditors. According to the report, the town does not appropriately segregate accounting duties. In response to this finding, the town writes, “It is not cost-effective to achieve complete segregation of duties within the accounting department.”

Law & Order

Clark Hill Wins for Accounting Firm in Tax Dispute With Rock Band Member [Clark Hill]
The Clark Hill trio convinced the court that the accounting firm was not liable for an employee’s business management and tax preparation services she provided on the side for a member of a rock band. The musician filed a complaint because the accounting firm’s employee failed to timely file tax returns from 2014-2018. The musician, his wife, and his businesses sued the accounting firm and the employee for over $3 million in penalties and interest and then $2-4 million in emotional distress damages. “Our client’s employee had been working with the musician as a side job,” Diehl said. “We submitted evidence to the court that Plaintiffs’ names didn’t show up on the firm’s conflict checks, there was no retainer, no payment, and no knowledge by the firm of the relationship.”

Deloitte Unable to Defeat ERISA Lawsuit From Spinal Specialist [Bloomberg Law]
Deloitte LLP remains on the hook to face a spinal surgery clinic’s allegation that the insurer failed to reimburse the specialist for its medical services, according to a district court. Deloitte LLP remains on the hook to face a spinal surgery clinic’s allegation that the insurer failed to reimburse the specialist for its medical services, according to a district court. Atlantic Spine Center LLC plausibly alleged that Deloitte LLP Group Insurance Plan violated the Employee Retirement Income Security Act by failing to comply with the terms of their benefit plan, according to an opinion. Judge Brian R. Martinotti denied Deloitte’s motion to dismiss the lawsuit on Tuesday in the US District Court for the District of New Jersey.

Rules and Regs

PCAOB Revokes Registration of Chinese Firm for Repeatedly Violating PCAOB Rules and Failing To Cooperate with Board Investigation [PCAOB]
The Public Company Accounting Oversight Board (PCAOB) today announced a settled disciplinary order(PDF) sanctioning JTC Fair Song CPA Firm (“the firm”), a public accounting firm located in Shenzhen, the People’s Republic of China, for repeated violations of PCAOB rules and for failing to cooperate with an investigation into those violations. The PCAOB found that, over a multiyear period, the firm repeatedly failed to make required filings in accordance with PCAOB rules. First, on multiple occasions, the firm failed to timely report the participants in its issuer audits on PCAOB Form AP, in violation of PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants. Second, the firm failed to timely file its annual reports on PCAOB Form 2 for 2021, 2022, and 2023, in violation of PCAOB Rule 2201, Time for Filing of Annual Report.

Lovesac to settle accounting violation suit brought by SEC for $1.5 million [Furniture Today]
The SEC complaint, filed in the U.S. District Court for the district of Connecticut on Oct. 29, alleged that former CFO Donna Dellomo and former controller Yoon Um, both CPAs, failed to properly record the cost of shipping finished products from Lovesac’s distribution center to its end customers.

Academia

Deloitte Foundation Honors a Legacy in Accounting [The Local Voice (Mississippi)]
To honor the life and 40-year career of the late Guy Moore, of Pascagoula, the Deloitte Foundation has renamed an endowment it established in 2022 with a $1.5 million gift to the Patterson School of Accountancy at the University of Mississippi.

AI

EU’s Exploration of an AI Tax Shows an Anti-Innovation Mindset [Bloomberg Tax]
Recent AI advancements come at a time when the EU is claiming to move away from overregulation to focus on competitiveness. If the EU is serious about this mission, its answer to the AI-tax question matters. Broad-based improvements to corporate taxation would better support an innovative Europe than narrow carveouts or punitive tax hikes. As with any innovation, its fragilities take time to iron out, and taxes will play only one part of governments’ approach to AI. But how policymakers contend with those fragilities through the tax code can make or break new economies. But you wouldn’t know that if you listened to the European Parliament. Last month, the newly elected chairman of the tax subcommittee claimed “there is no evidence” that taxation discourages innovation.

Tax

Steps companies should take now to prepare for major tax legislation in 2025 [EY]
Whether you call it the “Super Bowl of Tax” or “Taxmageddon,” one thing is clear: Congress is all but certain to consider major tax legislation in 2025. That’s because essentially all of the individual income tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA) expire at the end of next year, setting up tax increases on nearly every American taxpayer.

The post Friday Footnotes: PwC Scandal Somehow Gets More Scandalous; Deloitte Denied in Court; Withum Embiggens in Florida | 11.8.24 appeared first on Going Concern.

You won’t find trash cans at the desks in Deloitte’s new 138,000-square-foot office at Millennium Partners’ Winthrop Center tower in Boston’s Financial District.

That’s because the professional services giant’s leaders want employees getting up and going to common receptacles for trash, recycling and composting, part of the sustainability push that led the firm to sign a lease at the new building.

Said Deloitte New England MP Rebecca Chasen, “It forces people to go out and do the right things with their trash.” First you force people back into the office and now you won’t even give them their own trash cans?

We don’t know what type of trash cans Deloitte uses so we’re just going to have to guess on this one. Trash Cans Unlimited (seems legit) sells a 30-pack of these 14 gallon plastic desk side cans for $223.86, so approximately $7.46 per can.

Times about 3,500 employees in the Boston office and that’s a savings of $26,110.

When announcing the deal via press release last summer, the developer said that Deloitte’s Winthrop Center lease was the largest office lease signed in Boston and the surrounding community up until that point in 2023. They also said:

Located in the heart of Boston, the next-generation office space features a floor plate designed for a collaborative, flexible work environment; outdoor space on every floor; and amenities geared toward enhancing the everyday experience and wellbeing of organizations’ most important assets, their people. The newly signed lease is the largest office lease signed in Boston and the surrounding community this year. Deloitte is targeting to move into its new space at Winthrop Center in fall 2024.

Trash cans not included.

The post This Deloitte Office Has Eliminated Trash Cans at Desks to Make Staff Get Up Off Their Asses appeared first on Going Concern.

Here’s someone on r/accounting who says they were among the people let go at CohnReznick seemingly out of nowhere:

Been at CR for six+ years, overall a good job and I liked it. Got an email yesterday titled “Important Meeting” with no context. Had a feeling something was off. Quite a few other coworkers got the email. Turns out they’re downsizing and got let go. Not sure where to go from here. Thanks for listening to me vent, any tips/help appreciated.

Edit: To add some extra context, based in Texas. Went full remote since covid. Worked mainly Gov side majority of my time there. SR Consultant by the time I got let go. Other coworkers that got let go were Managers with more time put in than I had.

Edit 2: Was told 25 people got laid off. Pretty wild

Two other sources have confirmed there were indeed layoffs at CR including some east coast people. We don’t have full numbers at this time, will update if we get them. If you have more info, get in touch via email or text.

Is CohnReznick perhaps cleaning house ahead of a private equity deal?

The post Layoff Watch ’24: CohnReznick Surprised Some People With Layoffs This Week appeared first on Going Concern.

WSJ reports today that KPMG is laying off a few hundred people in audit “as it works to make up for lower levels of voluntary turnover.” Meaning attrition is still too low.

The Big Four accounting firm last week notified about 330 people, or nearly 4% of its roughly 9,000-person U.S. audit workforce, that they would be let go in the coming weeks, people familiar with the matter said. The cuts have focused on employees such as associates and managers, and included no partners, the people said.

“The actions reflect our ongoing focus to align the size, shape and skills of our workforce to the market, while addressing continued low levels of attrition,” KPMG said in a statement to WSJ. “We remain focused on investing in our people to grow our business with quality.”

The Americas region is the only segment of KPMG’s global business that shrunk in headcount last year — from 66,892 to 62,781. Revenue results haven’t been released yet — KPMG is last to report of the Big 4, usually around December — so we don’t have a full picture on how their year shook out. All we know is that not enough people are quitting.

The last time KPMG did a serious round of layoffs was last summer. See: Layoff Watch ’23: The KPMG Workforce is Shrinking By About 5% (UPDATED)

Shortage? What shortage?

KPMG to Lay Off 4% of U.S. Audit Workforce to Counter Fewer Voluntary Exits [WSJ]

The post Layoff Watch ’24: KPMG Shrinks Audit By a Few Hundred People appeared first on Going Concern.

Grant Thornton’s 2024 State of Work in America survey was released today and these key findings alone will make you depressed (if you aren’t already).

• 51% of respondents reported to have suffered burnout in the past year
• 63% named mental and emotional stress as the top cause of burnout
• 40% said people shortages are the most stressful part of working at their organization

Fun. It gets worse. The number of respondents suffering from burnout in the past year jumped by 15 percentage points from last year’s survey.

Respondents said the top causes of burnout were mental and emotional stress at 63%, followed by long hours at 54%.

Alongside the rise in burnout, respondents reported a decline in their overall well-being in 2024, noting a decline in key areas, including mental (32%) and financial (30%) health.

Said Joe Ranzau, managing director of Growth Advisory Services at Grant Thornton: “External factors such as increasing global conflicts, post-pandemic inflation and a particularly stressful political environment are all outside stressors that can burden the minds of employees, who in turn bring these worries with them into the workplace.” Tell us, are global conflicts and politics weighing on your mind at work?

Here’s what respondents had to say about why they’re burned out at work:

And here’s what they had to say about which parts of their job are most stressful:

Now let’s talk compensation. Rather, let’s let GT’s press release talk compensation:

When asked what initially drew them to their organizations, respondents cited benefits (48%) and base pay (45%) as the top two factors. These same elements also play a key role in retention, with 53% identifying benefits and 44% highlighting base pay as the main reasons they remain with their current employer.

Now, with rising costs and inflation continuing to impact households, employees are becoming more critical of their wages and the costs associated with their benefits. To address this, leaders must leverage market data to stay competitive, practice transparency regarding their organization’s financial standing and ensure clear pay practices are in place.

Alright, we’re with you so far.

Rob Ginzel, director of Growth Advisory Services at Grant Thornton, notes that, over the past few years, workers have had the advantage in compensation negotiations, resulting in widespread wage increases. However, inflation over the last year has eroded those wage gains, and the hiring dynamic is now shifting back toward an employer-favored marketplace.

“In times of financial constraints, employers need to recognize that compensation isn’t just about salary,” said Ranzau. “Employees value flexibility in areas such as work schedules, job content and how and where work is done. But employers should be mindful that when salaries are lower, trade-offs — such as adjusting workloads or expectations — may not be as effective in retaining talent.”

Accounting firms:

Continuing on:

An interesting finding from the survey is that only 10% of workers expressed concern about potentially being laid off in the next year, despite job security ranking highly as a motivator for staying with an organization. The survey also found that 25% of workers currently hold a second job, and 37% are considering one, which can quickly contribute to declining wellness and increasing burnout.

A lot of them are probably not all too concerned because they want to get laid off.

Respondents also seem to be fairly confident they won’t be replaced by AI in the next 12 months. To the statement “I am concerned that my job will be reduced/replaced by AI in the next 12 months,” 28% fell in the agree pile, 16% neither agreed nor disagreed, and 56% disagreed or completely disagreed. This despite AI being incorporated into many of their workplaces in the past year.

You can find the full survey here.

Grant Thornton survey: Employee burnout continues to surge as mental and emotional stress mount [Business Wire]

The post Feeling Burned Out? Join the Club appeared first on Going Concern.

The Aussie feds are swarming PwC Australia HQ, staff have been advised to “please carry on as usual.”

Australian federal police officers have commenced a search for documents at the headquarters of PwC Australia in response to the damaging tax leaks scandal.

Treasury referred the matter – which relates to the sharing of confidential multinational tax proposals within the firm – to police in May last year.

In an email to staff on Monday, the firm’s chief executive, Kevin Burrowes, said staff should expect police to remain inside the Sydney headquarters for “several days”.

“This step is an expected development in relation to an investigation the AFP commenced in 2023 into the historical tax matter and individuals who have left our firm,” Burrowes told staff.

“We have been working with the AFP to facilitate its attendance and will continue to cooperate with its investigation.”

Burrowes urged staff to “please carry on as usual and remain focused on the important work we’re delivering with our clients and in the community”.

Grant Thornton’s most recent burnout survey is concerning:

Fifty-one percent of survey respondents have suffered burnout in the past year, a 15 percentage-point increase from last year’s survey. Respondents said the top causes of burnout were mental and emotional stress at 63%, followed by long hours at 54%.

Alongside the rise in burnout, respondents reported a decline in their overall well-being in 2024, noting a decline in key areas, including mental (32%) and financial (30%) health.

HR Dive discusses the recent CPE situation at EY:

A recent scandal involving online training at Ernst & Young has pulled back the curtain on the time and ethical pressures accountants and finance teams are under to balance the demands of client work with ongoing professional training requirements.

Given the demands CPAs face — often, they serve on understaffed teams due to a shortage of accounting talent, while also needing to obtain continuing professional education credits in order to maintain their certified public accounting licenses — some experts were not surprised to hear about the multi-tasking practice.

“If firms are trying to maintain the same book of business with diminished bandwidth, naturally CPAs are going to deprioritize things that are not addressing their client work, with their CPE requirements being an easy one,” said Omar Roubi, an accounting instructor at the University of Colorado Denver and director of education and content at LumiQ, a podcasting app for CPAs. “Accountants have to do the same amount of work with less resources, with time being one of them.”

Earlier: Studious EY Employees Just Trying to Grind Out CPE Get F**king Fired

Speaking of EY, and possibly “cheating,” EY Netherlands has found answer sharing in their ranks. If you’ve been following this story, you know they are most certainly not alone. Reports NL Times:

The accountancy firm Ernst & Young (EY) is the latest accounting company to discover exam fraud. The company reported this in its transparency report for 2023 and 2024. The fraud consisted of accountants sharing answers to mandatory tests, which is not allowed.

EY has been investigating since last year whether exam fraud took place within the organization between 2018 and 2023. The Netherlands Authority for the Financial Markets (AFM) asked all large accountant firms to investigate the practice. EY expects the investigation to be complete in 2025 but admitted that it has taken longer than expected.

Earlier:

The Conversation (Australia) asks a simple question: The ‘big 4’ accounting firms often consult for the same clients they audit. Should that be allowed?

Public trust in the auditing profession is under intense pressure. A series of high-profile scandals, both in Australia and overseas, has severely damaged its reputation.

This week, Australia’s corporate watchdog – the Australian Securities and Investments Commission (ASIC) – put the entire sector on notice.

In a letter to auditors on Wednesday, ASIC announced it would soon commence a new data-driven surveillance of auditor independence and conflicts of interest. Put simply, any practices that could compromise the integrity of auditing work.

The move comes amid longstanding calls for stronger regulation. Some have gone as far as to call for auditors – particularly the “big four” – to be banned from offering consulting services to their audit customers. Why? Fears it helps companies unethically game the system.

But our recent research, which specifically examines chief executive pay, offers an alternative perspective and suggests we should tread carefully.

You’ll have to go over there to read the view of Helen Spiropoulos, Associate Professor at University of Technology Sydney and Rebecca L. Bachmann, Lecturer in Accounting at Macquarie University.

Times‘ business editor Brian Carey strokes his meat to Grant Thornton Ireland’s recent private equity deal and suggests that Big 4 partners may be jealous:

GTI is a distant fifth in the Irish market, and its acquiring American cousin is an even more distant seventh across the pond. If the second-tier Grant Thornton can generate that amount of wealth for its partners, then its MacGregor-wielding, Babolat-chasing, Lycra-wearing peers must surely be wondering what enormous treasure lurks beneath the Big Four of EY, KPMG, Deloitte and PwC.

The Grant Thornton transatlantic deal is a ground-breaker, and probably overdue. A partnership is a very inefficient way to accrete capital within a business. Professional services firms need to invest in technology and more specifically in artificial intelligence.

Private equity, through New Mountain Capital, the backer of Grant Thornton US, has smoothed the path to corporatisation. It will provide new capital to robotise the drudgery. It will also dismantle the near-feudalism of the partnership system, where the equity partners lord it over the serfs who till the fields. A partnership is like an annuity: it guarantees a fat salary for up to 15-20 years, at which point you are bought out. A corporate structure, with share options as incentives, should introduce some semblance of meritocracy.

Earlier: Grant Thornton Merges With Grant Thornton

Stanford fondly remembers William Beaver, “a ‘titan’ of accounting,” who passed away on October 14.

Beaver joined the Stanford Graduate School of Business faculty in 1969 after four years at the University of Chicago, where he earned his MBA and PhD. He received his undergraduate degree from Notre Dame, where he also met his future wife, Suzanne Marie Hatton.

Throughout his career, Beaver’s innovations expanded and enriched the literature in the accounting field. He became a leading authority on the role that corporate financial statements play on stock prices, and was among the first scholars to examine how financial ratios could predict business failures. His 1966 paper Financial Ratios as Predictors of Failure has been cited more than 10,000 times. In 1968, he published Information Content of Annual Earnings Announcements, which later earned a Seminal Contribution to Accounting Literature Award. He also wrote the book Financial Reporting: An Accounting Revolution, now in its third edition.

“His impact on the research, teaching, and practice of accounting cannot be overstated,” says Maureen McNichols, the Marriner S. Eccles Professor of Accounting and Public and Private Management at Stanford GSB.

In AI news: it’s biased. Surprise. GeekWire digs into why AI prefers white male job candidates:

As employers increasingly use digital tools to process job applications, a new study from the University of Washington highlights the potential for significant racial and gender bias when using AI to screen resumes.

The UW researchers tested three open-source, large language models (LLMs) and found they favored resumes from white-associated names 85% of the time, and female-associated names 11% of the time. Over the 3 million job, race and gender combinations tested, Black men fared the worst with the models preferring other candidates nearly 100% of the time.

That’s all I’ve got for now. If you see something we should be talking about, have a tip, or just an astute observation to share with the class, email or text the tipline (anonymously). Have a great week! Love ya, mean it.

The post Monday Morning Accounting News Brief: Feds Raid PwC; Big 4 Wants to Be Like Grant Thornton!? | 11.4.24 appeared first on Going Concern.

Audit

Private Equity’s Ties to Companies’ Auditors Have Never Been Closer. That Worries Some Regulators. [Wall Street Journal]
By the end of 2025, more than half of the largest 30 U.S. accounting firms will have either sold an ownership stake or part of their business to private-equity investors, up from zero in 2020, said Allan Koltin, chief executive at advisory firm Koltin Consulting Group. An auditor’s objectivity, both real and perceived, is critical to the business of accounting firms, which typically also have consulting and tax operations. Whether that independence can be preserved or not under new buyers is coming into question, especially as private-equity managers take a hands-on approach with their new acquisitions.

Sketchy financials send Supermicro auditors running for the hills [The Register]
Supermicro shares took a nose dive on Wednesday, sliding more than 30 percent after the accounting firm hired to review its reporting practices resigned after determining they were just a bit too sketchy to warrant the risk. “We are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and audit committee’s representations,” Ernst & Young wrote in a resignation letter, which also raised alarm bells regarding Supermicro CEO Charles Liang’s influence over the board.

PCAOB Publishes New Supplement to Staff Guidance Concerning the Remediation Process [PCAOB]
On Thursday, the Public Company Accounting Oversight Board (PCAOB) published a supplement to its Staff Guidance Concerning the Remediation Process. The supplement provides audit firms with additional guidance regarding remediation, including making the most of the remediation period, the potential influence of non-technical factors on persistent quality control criticisms, and more. As mandated by the Sarbanes-Oxley Act and implemented by PCAOB rules, the Board cannot disclose its criticisms of an audit firm’s quality control systems for a period of at least 12 months after the Board’s initial publication of its inspection report of that audit firm. During that 12-month period, the audit firm is expected to remediate identified quality control criticisms. If the audit firm fails to address any identified quality control criticisms to the Board’s satisfaction, the Board will then disclose those criticisms to the public. “Making sure audit firms remedy defects in their quality control systems is an important way for the PCAOB to drive improvement in audit quality and protect investors,” said PCAOB Chair Erica Y. Williams. “The PCAOB encourages audit firms to apply this supplement to the staff guidance when addressing quality control criticisms.”

Audit Reports Matter After All, Appeals Court Says [Wall Street Journal]
A federal appeals court has changed its mind and decided that accounting firms’ audit reports really do matter to investors after all. In a case brought by investors against the accounting firm BDO, the Second U.S. Circuit Court of Appeals on Thursday released an amended version of an opinion it originally decided in August 2023. Back then, the court ruled in favor of BDO in a shareholder lawsuit over its audit work for the insurance company AmTrust Financial Services.

Video

Firm Watch

MSL, P.A. joins forces with Forvis Mazars in Florida [Forvis Mazars]
Forvis Mazars is expanding its presence in Florida with the addition of MSL, P.A., effective November 1. MSL has a 50-year legacy of building deep relationships with its clients across Florida. This strategic acquisition significantly bolsters Forvis Mazars’ growing presence in the state by adding approximately 120 professionals, including 14 partners, and new office locations in Orlando and Fort Lauderdale.

BDO promotes 2,400 staff and partners [Business & Accountancy Daily]
UK BDO, obviously.
Top five firm BDO has promoted 2,440 people, including 36 new partners across all its services lines and central operations. Anna Draper, BDO’s head of people, culture and purpose, said: ‘Celebrating the success of our people is such an important part of our culture. I want to extend my congratulations to everyone who has received a promotion and thank them for their hard work and dedication.’

Cherry Bekaert, one of Cincinnati’s largest accounting firms, plans local growth [Cincinnati Business Courier]
Cherry Bekaert came on the Cincinnati accounting scene a little more than a year ago, and it has plans to expand its local presence. “We see a huge opportunity in the market to grow, and we would love to aggressively grow that practice,” Brad Smith, Cherry Bekaert regional market leader, told CBC. “We have an intentional focus to grow Cincinnati.”

Grant Thornton names new Boston office leader [Boston Business Journal]
Jeff Strassman, a partner in Grant Thornton’s audit and assurance practice, is the firm’s new leader in Boston. He succeeds Chris Martin, who has taken on a leadership role within the firm’s tax practice, the firm announced.

Talent

Tax firms see technology as the future, but tax tech personnel are sorely needed [Thomson Reuters]
Although many tax & accounting firms are increasingly focusing on technology, their personnel plans towards technology are largely static, according to the 2024 Tax Firm Technology Report. Many survey respondents said their firms do not have full insight into how their technology is governed and instituted throughout the firm.

Offshoring for CPA firms: The hows and whys [Journal of Accountancy]
Of the more than 1,100 firms that participated in the AICPA’s 2023 National Management of an Accounting Practice (MAP) survey, about 30% said they outsourced domestically and 25% said they outsourced to offshore workers. Another 14% said they planned to start outsourcing domestically, and 12% said they planned to start offshoring. The CPA talent shortage and an increase in demand for accounting services in the United States are prompting many firms to go beyond their traditional hiring practices and explore the global talent pool and staffing across time zones.

Someone should tell the AICPA about the importance of competitive salaries CC: @going_concern https://t.co/2HZX74ztx3 pic.twitter.com/5TjbksOyVp

— McRib Hard Seltzer (@kleib323) November 1, 2024

News

Moody’s revokes bond rating from 9 Massachusetts issuers [Providence Business First]
You guys, this municipal thing is bad. Why aren’t we talking about it more?
Moody’s Investor’s Service on Oct. 9 notified 61 bond issuers across the U.S. that their ratings had been revoked due to “incorrect, insufficient or otherwise inaccurate information.”

Fraudsters get $47 million from practitioner priority service line scheme [Journal of Accountancy]
The IRS was ineffective in its efforts to stop a scheme involving fraudsters calling the practitioner priority service telephone line, resulting in estimated losses of over $47 million, the Treasury Inspector General for Tax Administration (TIGTA) said in a report dated Oct. 22 (TIGTA Rep’t No. 2025-IE-R001). The fraud occurred from Aug. 12, 2023, to April 16, 2024, during which time fraudsters filed 4,828 tax returns and claimed nearly $462 million in refunds, the report said. The IRS detected 4,254 of the fraudulent claims but did not stop 574 returns, TIGTA said. TIGTA said that because of IRS management inaction, it issued an alert on Feb. 8, 2024, to request the IRS plan to stop the fraud immediately.

Practice Management

AI is here to stay – the profession must embrace it, responsibly [ICAEW Insights]
It’s important that accountants adopt AI with their eyes open; aware of its strengths and weaknesses, what kind of AI model is most effective for the task at hand and what needs to be done in order to mitigate the various risks that could come along with it. Accountants have an ethical duty to minimise AI biases by training them with good-quality data.

Is your firm hiring? Having trouble finding anyone good? Accountingfly has your back. Check out this week’s top remote accounting candidates and sign up for Always-On Recruiting to get a fresh batch of accountants and auditors for hire in your inbox every week — it’s FREE!

You might also want to check this out if you’ve been having a tough time DIY recruiting.

The post Friday Footnotes: All Audit Reports Matter; BDO Ordered to Pay; Just How Many Firms Are Offshoring? | 11.1.24 appeared first on Going Concern.

By the numbers:

• Revenues grew by 3.7% in local currency and 4.3% in US dollars
• Workforce grew to over 370,000 people in 149 countries

That’s a significant drop from last year’s growth of 9.9% in local currency and 5.6% in freedom bucks.

PwC says they added 6,161 jobs in FY24 and 68,681 over the prior two years. Since the fiscal year ended on June 30, that doesn’t include losses from recent PwC US layoffs obviously.

In his first revenue announcement since taking the big chair at PwC last year, PwC Global Chairman Mohamed Kande said: “It’s been a year full of successes and challenges, in which we’ve supported our clients and made meaningful contributions to our stakeholders in the regions and communities where we live and work. Despite a backdrop of economic headwinds, we’ve seen revenue growth across all of our lines of business, deepened our strategic alliances, and invested $1.5 billion to expand and scale our AI capabilities. As a network, we are focused on building trust and delivering quality services that our clients need to prosper today and to reinvent their businesses for tomorrow. We are focused on collaboration and innovation to help our stakeholders navigate an increasingly complex global environment, and I am proud of what our 370,000 people have accomplished this year.”

The firm chose to use the words “economic and business headwinds” to describe the hits the firm has taken in Australia due to that whole tax scandal thing because it would be weird to say “we fucked up and lost business” in an official revenue announcement. See also: PwC Australia flags revenue hole, partner profit cut due to tax scandal legacy published by Reuters in August of 2023.

But let’s see the rest of the good and bad of their year around the world:

While economic growth remains sluggish in a number of countries and political uncertainty dampened demand in some markets, overall revenues continued to grow year-on-year across the PwC network.

• Europe, Middle East and Africa (EMEA) revenues were up by 8.6%. The consolidated revenue of the UK and Middle East rose strongly reflecting increasing demand for services in the Middle East.  Germany had a steady year of growth, while there were particularly strong performances from Sweden and France. Across Africa overall, revenues declined due to ongoing tough economic conditions, however in South Africa business was buoyant. Central and Eastern Europe (CEE) had another solid year of growth.
• Some difficult market conditions in Asia Pacific meant revenues were down overall by 5.6%. Demand was particularly slow in China where revenues fell, and in Australia economic and business headwinds, as well as the divestment of the firm’s government consulting business, contributed to a decline in revenue over last year. India continued to perform very well with a strong increase in revenues.
• Across the Americas revenues were up by 3.4% reflecting difficult market conditions in the US. Demand for services continues to be strong in Brazil

Revenue and growth by service line:

• Assurance: $19.5 billion, growth of 3.4% (FY23: US$18.7 billion)
• Advisory: $23.3 billion, growth of 2.6% (FY23: US$22.6 billion)
• Tax: $12.6 billion, growth of 6.3% (FY23: US$11.8 billion)

A few areas in which advisory won in FY24:

We have continued to invest in the work that we undertake with our key technology alliance partners as we help our clients with the ongoing digital transformation of their operations. Wins with our alliance partners grew by 24.5% in FY24. Our investment in alliances will continue in the coming years and we see this as an increasingly important segment of our advisory business. [Ed. note: PwC announced in May that it became the first reseller for ChatGPT Enterprise ever, giving us an opportunity to use a very dated Hair Club for Men reference as they’re also an OpenAI customer.]

In the past 12 months we also saw healthy and growing demand for our Managed Services business which now employs 58,000 people across the world. Our work helping organisations in financial difficulty and facing liquidation also continued to grow with wins from this segment of our business up by 30% in FY24.

It seems clear at this point that Deloitte is winning this year’s revenue contest (again) although their overall growth lagged behind PwC at just 3.9% in US currency.

• Deloitte: $67.2 billion
• PwC: $55.4 billion
• EY: $51.2 billion
• KPMG: TBD, last to report

Wouldn’t it be funny if KPMG ends up announcing double-digit growth? Ha-ha!

The post PwC Reports Un-Chadly Revenue For FY24 appeared first on Going Concern.

Let’s preface this entire article by saying both the original BDO lawsuit and the counterclaim embedded below are allegations at this point in time.

In March, we reported on BDO USA suing its former healthcare transaction advisory team national practice leader after said former leader Phuoc Vin Phan dipped out to go work for Ankura Consulting and allegedly sniped several of his team members on the way out. BDO’s lawsuit alleged that Ankura “set its sights on stealing the BDO Healthcare TAS practice rather than building a practice of its own from the ground up” and that it would use Phan to accomplish that goal.

Here’s a quick excerpt from BDO’s lawsuit:

As part of this scheme, while still a partner of BDO, Phan solicited at least seven of the 11 full-time employees in the Healthcare TAS practice—all of whom reported directly to him—to leave their employment with BDO and join Ankura. His conduct violated his fiduciary duty to BDO as well as the plain terms of his former partnership and employment agreements with BDO. These were all duties and commitments Ankura knew about.

Phan’s egregious misconduct did not end there. On his way out the door from BDO to Ankura, he stole or attempted to steal voluminous quantities of BDO’s confidential information and trade secrets as well as the confidential information of multiple BDO clients, with the goal of taking all of that information to Ankura and using it in his new job for the benefit of Ankura.

Three of the employees Phan solicited to leave BDO and join Ankura also stole or attempted to steal BDO’s confidential information and trade secrets and that of its clients and to take that information for Ankura. Two of them, Thomas Bradey (“Bradey”) and Mitchell Thomas (“Thomas”), were successful in their theft. They transferred substantial quantities of BDO’s confidential information and trade secrets to Ankura for Ankura’s financial gain.

All remain employed by Ankura today. Ankura, with Phan’s assistance, has stolen BDO’s Healthcare TAS practice. BDO now seeks a verdict that will require Ankura and Phan to pay for what they have stolen and to compensate BDO for the collateral harm their tortious conduct has caused.

That lawsuit filed in the United States District Court for the Eastern District of Virginia is embedded here if you want to give it a read: BDO Lawsuit Alleges a Defector Took the Team With Him When He Jumped Ship to Another Firm

Phan has now had a chance to respond officially and just like a different but similar lawsuit in which BDO sued a former partner who is now leading the National Private Equity & Asset Management Tax Practice at Armanino, he’s dropped some explosive claims against his former firm.

To refresh, these were the accusations levied by the former partner and Armanino defector Caleb Crandell in his counterclaim filed in the same court but different lawsuit in April:

• BDO refused to repay Crandell his capital of $151k but reported the proceeds in his income tax form
• BDO leadership made false and misleading statements to get the ESOP vote to pass
• BDO misled the partnership that there was no private equity transaction
• BDO delayed partner retirements and reactivated retired partners to garner sufficient votes
• BDO didn’t allow partners sufficient time to sign new employment agreements
• BDO forced Crandell to inflate revenue to prop up the firm’s valuation ahead of an ESOP deal that was only announced to the partnership a week ahead of any voting in Orlando
• BDO refused to promote high performing directors, prompting them to look elsewhere

Now let’s see what Phan had to say in his counterclaim. Big thanks to the tipster who slipped us this.

Firstly, Phan denies most of BDO’s allegations other than the basic ones that relate to his employment as Healthcare Transaction Advisory Services National Practice Leader and that members of his former team do in fact work at Ankura. The counterclaim also says that many of BDO’s allegations do not relate or pertain to Phan, therefore no response is required. This goes on for 40 pages, we don’t need to go through it all.

Let’s get to the juicy bits. The preliminary statement of Phan’s counterclaim says:

BDO’s lawsuit against Phan is only the latest in a series of lawsuits brought by BDO against former employees who dared to exercise their right to leave the hostile and distrustful work environment at BDO and seek employment elsewhere. Indeed, many partners have been unexpectedly terminated or left without explanation, contributing to many other partners and employees leaving BDO for more stable and favorable employment. Rather than attempt to retain employees by working to improve its deteriorating and hostile culture – characterized by well-placed distrust over management’s intentions and the direction of the firm – BDO’s only retention strategy appears to be comprised entirely of intimidation and litigation. By filing this lawsuit, BDO now seeks to falsely represent itself as a victim, when it is anything but. By this counterclaim, Phan seeks to hold BDO to account for its false promises and improper conduct.

After enduring years of unfulfilled promises and a culture that was increasingly hostile towards its own employees, Phan decided to explore alternative employment options at other professional services firms – he interviewed with no fewer than three firms, including Ankura. Despite the fact that exploring better employment opportunities is something employees across the country do every day, and something that Phan was permitted to do under the terms of his employment agreement, BDO’s response was to threaten, punish and seek vengeance.

As part of its vendetta against Phan for having the temerity to seek employment elsewhere, BDO also seeks to punish Phan for other employees who likewise exercised their right to leave the BDO TAS practice. In its lawsuit, BDO insinuates that Phan and the other employees that left were outliers, and that but-for some kind of malfeasance they could not possibly have decided to leave BDO. This narrative is completely divorced from reality. The truth is that BDO, through its managing partner and a small circle of confidants, carefully fostered a culture of secrecy, fear, deceit, and retaliation over a period of years. They deliberately created a workplace environment where lawsuits like this one were broadcast to the firm during periodic partner calls as an unsubtle warning to those who might seek to leave – do so at your peril knowing that BDO will come after you. There is no mystery why Phan, and so many of his colleagues, decided to leave.

Indeed, around the time that Phan decided to look for other opportunities, there were several high-level departures among key employees at BDO, including the heads of BDO’s other major practice groups: Stephanie Giammarco (Head of Advisory Practice), Tony Alfonso (Head of Valuation) and Timothy Mohr (Head of Forensics Practice). Other partner departures followed as well.

Relevant article published here on October 28, 2022: Some High Level Folks Have Abruptly Left BDO and No One Seems to Know Why (UPDATE) — this article is referenced in Phan’s counterclaim (“The anxiety surrounding the leadership turmoil at BDO was not contained within its walls – there was rank speculation within the industry about what was happening (or not
happening) at BDO.”)

In early June 2023, the BDO partners received a calendar invite for a partnership call. During this call, Berson presented a plan to convert the legal structure of the firm from a partnership to a professional services corporation. Under this plan, the partnership would convert from BDO USA, LLP to BDO USA, P.A. Berson expressed that this was solely a tax mitigation strategy.

On that same call, several partners asked whether this plan had to do with a private equity or other kind of transaction. BDO leadership said the conversion was purely for purposes of reducing partner income taxes and that there was no private equity or any related transaction on the table, further misleading Phan and the partnership.

As part of the conversion, many partners expressed concern about changing their titles from “Partner” to “Principal.” Leadership informed the partnership that they could keep the “Partner” titles. This later proved to be another falsehood, as once the conversion occurred on or about July 1, 2023, the former partnership was told they were required to refer to themselves as “Principals” only.

BDO’s most recent “partner promotion” press release from October 1 contains 60 people promoted to principal and zero partners.

But here’s the most explosive allegation. Phan claims that in the months leading up to the ESOP transaction, “he was pressured to inflate revenue to increase the firm’s valuation for the transaction by manipulating and/or misattributing client ‘Credits.'”

Credits are either prepayments (e.g., retainer amounts) or amounts paid more than the actual worked performed that either must be refunded to the client or applied against future work. Phan was improperly pressured to recognize Credits as revenue to artificially boost revenue numbers. This is particularly troubling given that BDO serves as the independent auditor of many public and private companies.

On or about August 3, 2023, BDO held a partnership call where leadership presented the ESOP transaction, whereby the partners would sell 42% of firm equity to an ESOP.

On the call, Berson explained that the valuation of the firm for the ESOP deal was based on trailing twelve-months performance and a “very conservative” growth projection. However, given the nature and methods of historical organic growth of the firm, there were legitimate questions about the basis and validity of the projections. Those questions went unanswered.

It’s worth noting here that BDO has not issued a press release announcing revenue this year. The last revenue press release the firm put out was in July 2023. The ESOP was announced in August of that year.

Only Berson and BDO’s Board of Directors, all of whom stood to significantly benefit personally from the ESOP transaction, had input into the projections and assumptions that drove the valuation for the ESOP transaction.

On the same August 3rd partnership call, Berson informed the partnership that there would be a meeting in Orlando, Florida the week of August 9, 2023, to vote on the ESOP transaction, giving the partners only one week to evaluate the personal and professional implications of the transaction.

At the Orlando meeting, despite prior representations that private equity was not involved, representatives from the involved investment bank and private equity lender thanked Berson personally for partnering with them over the last 15 months to complete the transaction.

Upon information and belief, BDO had misrepresented to their partnership the purpose of the ESOP transaction and corporate conversion. Over the span of two years, Berson and BDO leadership covertly hatched a scheme to enrich themselves at the expense of their partners and employees by mortgaging the future of the firm for their sole personal benefit. Upon information and belief, Berson personally collected many tens of millions of dollars from the transaction.

The counterclaim once again cites Going Concern here. A partner we spoke to at length just before the transaction was announced — who insisted on anonymity due to fear of retribution from the firm — told us Wayne Berson stood to make $25-30 million from this deal though as far as we know the official numbers have never been disclosed externally. Financial Times published this story on August 13: “BDO partners in line for windfall after $1.3bn debt deal with Apollo Global Management.”

Like Crandell, Phan claims BDO owes him money. “Following BDO’s conversion from a partnership to a corporation, Phan entered a promissory note with BDO dated July 1, 2023,” says the counterclaim. “To date, BDO owes Phan $39,997 pursuant to the Promissory Note. BDO has refused to pay Phan the $39,997 owed under the Promissory Note.” He also says BDO owes him $8,127.77 in expenses reimbursement, expenses BDO says are improper.

If you have something to add to this or any related stories, you’re welcome to email or text the tipline. Tipsters are always anonymous.

There’s more here but this article is already too long. Enjoy:

The post Another Explosive BDO Lawsuit Counterclaim Accuses the Firm of Inflating Revenue, ESOP Tomfoolery appeared first on Going Concern.

The obligatory press release:

Dignari’s 300-strong workforce utilizes innovation at scale and data-driven strategies to advise US government clients. Since 2013, the company has been driving successful program implementations, designing high-impact solutions that maximize effectiveness, prototyping emerging technologies and using data science to improve performance measurement.

“We are excited about welcoming the world-class Dignari team to the EY Government & Public Sector practice,” said Doree Keating, EY Americas Government & Public Sector Leader. “We believe that blending EY US’s commitment to provide customers with mission-ready solutions and Dignari’s IAM capabilities in the homeland security space will offer a highly differentiated value proposition for our government clients.”

“For over a decade, Dignari has made a significant impact on furthering the federal government’s security mission with modern technologies,” said Gena Alexa, Dignari Founder and Chief Executive Officer. “These efforts can be scaled across local and state governments as well — and when combined with the power of the EY network will strengthen outcomes for both the public sector and the people it serves.”

Dignari salaries from Indeed if anyone’s curious.

According to the 2023 Top 100 Contractors report (the Excel sheet can be found here from SAM.gov) that lists the top 100 vendors for the US Government by dollars obligated each fiscal year, Deloitte ranks #26 with $3,711,875,824.60 obligated. Big D holds the distinction of being the only Big 4 firm on the list, ahead of Accenture at #34 but unsurprisingly behind Booz Allen Hamilton at #16. As Trump fans are currently beefing with Deloitte and calling for their government contracts to get cancelled faster than a B-list comedian tweeting on Ambien, now seems like a great time for the other firms to make big moves in what has historically been a space Deloitte dominates.

The Department of Defense is by far EY’s biggest government client according to data on USASpending.gov. For FY23, EY received $312,906,294 in DOD obligations. The next largest obligation amount is the General Services Administration (GSA) with a comparatively tiny $37,306,035.

Security powerhouse Dignari joins EY to accelerate mission enablement across the public sector [EY]

The post EY’s Growing Its Public Sector Practice With a New Acquisition appeared first on Going Concern.

According to a Deloitte survey released last week, half of full-time workers at companies with a minimum annual revenue of $100 million surveyed are “very or extremely worried that the future generation of workers may enter the workforce without sufficient interpersonal and business skills.” Yeah, that’s already happening. See also: Big 4 Firms Are Noticing a Sudden Skills Gap in New Hires and ‘Lockdown-Damaged’ New Hires Struggle to Socialize at KPMG UK. All this time we thought the art of water cooler chitchat was a useless skill but instead it’s a dying one.

Many of those surveyed feel their employers focus too heavily on technical training and not nearly enough — or even at all — on human skills.

Said Deloitte:

In a workforce increasingly leveraging both humans and machines, human capabilities play an essential role in career development, according to nearly 9 in 10 respondents across generations. Concurrently, respondents want their employers to prioritize a myriad of human skills, but teamwork and collaboration ranked at the top (65%), followed by communication (61%) and leadership (56%) more than technical skills like AI integration and data analysis (54%).

Employers: “Best I can do is a mandatory online learning session about ChatGPT prompting.”

Above all, respondents believe these human competencies have staying power. Nearly all surveyed (95%) agree human skills are “timeless” and always important. Yet, 70% of respondents report having worked at a company that pushed employees to learn a new technology-based skillset, only for that technology to fall out of use.

Some more key findings:

• 87% of workers see human skills like adaptability, leadership, and communications as integral to their career advancement.
• Only 52% think their company values employees with human skills more than those with technical skills.
• 94% of respondents are concerned that future generations will enter the workforce without the necessary human skills.
• Workers want their employers to prioritize teamwork and collaboration (65%), communication (61%), and leadership skills (56%) more than technical skills like AI integration and data analysis (54%).

And finally, a pretty picture putting it all together. Deloitte made this a PDF for some reason, sorry.

Most Workers See Need for Greater Balance Between Tech and Human Skills: Deloitte Survey [Deloitte]

The post Deloitte Survey: Machines Are Taking Over; Employees to Become Even More Awkward and Uncollaborative appeared first on Going Concern.

On October 5, the tropical storm soon-to-be-called Hurricane Milton formed in the Gulf of Mexico and by Monday, October 7 became a Category 5 hurricane with winds of 180 mph. Milton would go on to earn the distinction of being the second-most intense Atlantic hurricane ever recorded over the Gulf of Mexico.

On October 6, 35 counties across the State of Florida were under a state of emergency; by the following day, that number had grown to 51. Ahead of Milton’s expected landfall on Wednesday or Thursday of that week, more than a dozen counties in and around Tampa issued mandatory evacuation orders for residents. “Failure to adequately shelter may result in serious injury or loss of life,” wrote National Hurricane Center forecasters in a report issued on October 8. “Milton has the potential to be one of the most destructive hurricanes on record for west-central Florida.”

Milton’s death toll stands at 32 in the US and three in Mexico as of October 21. It’s currently estimated that economic losses from Hurricane Milton could be over $100 billion.

So while PwC staff outside of Tampa were getting pink slips the week Milton was angrily swirling straight at the west coast of Florida, the firm made the decision not to fire people who were likely under evacuation orders from a once-in-a-lifetime hurricane. A tipster originally told us the week of the 7th that PwC would wait until the following Monday to axe Tampa staff but according to Tampa Bay Business Journal, cuts the Tampa office came last Thursday. This aligns with what we were told by our tipster who said PwC “dropped the axe” on October 21 and “destroyed Florida.”

TBBJ didn’t have numbers on how many people were affected, nor do we, but we’re told most cuts happened from senior associate to senior manager level. PwC US COO Tim Grady told TBBJ in a statement that they’re “adapting to meet the needs of our clients and the rapidly changing market.”

“To remain competitive and position our business for the future, we are continuing to transform areas of our firm and are aligning our workforce to better support our strategy, including attracting and moving the right talent and skill sets to the areas where we need them most,” he added.

“It’s not over,” our tipster warns. “Other groups are being evaluated.”

The post PwC Was Thoughtful Enough to Wait Until After Hurricane Milton to Lay Off Tampa Employees appeared first on Going Concern.

People Management discusses the recent CPE debacle at EY that led to people losing their jobs.

“Given EY’s history with professional training cheating, it’s understandable that they’re taking a firmer approach to personal development,” Martin Drake, director at Higher, told People Management.

However, he also sees a need for a nuanced application of these policies. “Cheating on formal qualifications versus completing multiple surveys on soft skills development feel like two different matters that can be treated in different ways,” he explained.

Drake suggested that “a hard line might not always be the best approach,” advocating instead for a balanced strategy that acknowledges the context of each situation.

“Sometimes all that’s required is a grown-up conversation,” he added, indicating that open dialogue could encourage genuine growth without an overly rigid policy.

Headline of the day courtesy The Times: Grant Thornton partners all set to push boat out as a sale looms

The Sunseeker Ocean 156 cut an imposing shape as it bobbed in the Southampton marina last month. The 82ft superyacht, which boasts three decks, spacious cabins and a built-in barbecue, was appearing for the first time in public at the city’s annual boat show, which drew nautical enthusiasts from across the country.

Among the hordes of well-heeled would-be sailors gazing up at the Sunseeker were several UK partners from the accountancy firm Grant Thornton. If all goes their way, they may be in the market to snap up a luxury yacht of their own next year.

Grant Thornton’s partners, who earned an average of £644,000 last year, are set for a big windfall as their firm prepares to sell a majority stake to a private equity giant. If a deal goes ahead, it will be Britain’s biggest accountancy takeover, but it is dividing the City’s huge accounting community.

Not sure who needs to read this today, probably way too many of you.

The moment I stepped in my first accounting firm… the charge hours required were 2,800 and 3,000 total.

I worked hard, billed the most, and felt terrible. My doctor yelled at me in the first 6 months for being negligent of my health.

I looked around at all of the managers and…

— Crown (@DocCrownMedia) October 23, 2024

H&R Block Canada got hacked and the Canada Revenue Agency didn’t inform the public, reports CBC:

At the height of this year’s tax season, the Canada Revenue Agency discovered that hackers had obtained confidential data used by one of the country’s largest tax preparation firms, H&R Block Canada.

Imposters used the company’s confidential credentials to get unauthorized access into hundreds of Canadians’ personal CRA accounts, change direct deposit information, submit false returns and pocket more than $6 million in bogus refunds from the public purse, an investigation by CBC’s The Fifth Estate and Radio-Canada has found.

In one case, the hackers filed a return with a legitimate postal code, but a fake address on a non-existent Tomato Street.

“Obviously the door is open and some people are infiltrating the system,” André Lareau, an associate tax professor at Laval University in Quebec City, said in an interview. “But the CRA does not seem to have found the key to lock the door.”

Croatia, like everywhere else, is facing a shortage of accounting professionals due in part to mass retirement of boomer-aged accountants. Here’s a proposal to at least make the existing accountants’ jobs easier:

During the Croatian Chamber of Trades and Crafts’ (HOK) second meeting in Trakošćan, more than 200 accounting professionals convened to address this concern and explore solutions.

The meeting underscored an immediate need for a dedicated bookkeeping curriculum to prepare new professionals to enter the field.

A key proposal introduced at the gathering was the adoption of a ‘one piece of data once’ reporting principle.

This initiative aims to streamline data sharing among government institutions, reducing redundant paperwork and lessening the administrative load on accounting firms.

Deloitte is dropping a cool $30 million in Egypt:

Amr Talaat, Minister of Communications and Information Technology, inaugurated the Deloitte Innovation Hub in Cairo, a specialized centre providing innovative tech services. Launched with $30m in investment over three years, this is Deloitte’s first global hub for exporting digital services from Egypt, despite the company’s long-standing presence in the country as a consultancy and accounting firm.

BDO Hong Kong is taking some heat after layoffs:

BDO has confirmed the dismissal of 30 staff members, primarily within its audit division, just five months after prior layoffs, sparking internal discontent over alleged broken promises by senior management. Andrew Lam, the newly appointed Managing Director – Assurance and International Liaison Partner at BDO, exclusively revealed to local media HK01 the tough decisions necessitated by the financial review period in October, traditionally a time for reassessing staff needs against operational demands without compromising client services or regulatory commitments.

“Frankly, it was a tough decision,” Lam stated in a telephone interview, acknowledging the delicate balance the firm must maintain in its staffing levels. This move comes after a similar reduction in May, which also affected 30 employees, indicating a pattern of resizing that BDO insists aligns with broader economic conditions rather than a shift in corporate integrity.

The layoffs have stirred unrest among the staff, with some expressing feelings of betrayal. Earlier in the year, post-May layoffs, assurances were reportedly given that no further cuts would be imminent, yet the recent actions suggest otherwise. “Time flies,” Lam commented on the lapse, suggesting that while the promise was made in good faith, the economic realities dictated otherwise.

Wow. See, this is why firms use corporate communications and PR pros to interact with the media.

Supposedly Kamala Harris would replace SEC Chair Gary Gensler if she gets elected…and one of her top picks is the woman who was literally just sworn in as PCAOB Chair for a second term.

The Harris transition team is vetting candidates to replace Gary Gensler as Chair of the Securities Exchange Commission (SEC), according to two sources close to the deliberations.

Unchained has learned of two potential replacements, Georgetown Law professor Chris Brummer and Chair of the Public Company Accounting Oversight Board (PCAOB) Erica Williams, who are said to have more favorable views on crypto than Gensler.

And that’s it. Bit of a slow day out there. Feel free to email or text any time if you spot something interesting, have a tip, or just want to yap. And follow us on X/Twitter for more lukewarm takes.

The post Monday Morning Accounting News Brief: GT Partners Eye Their Own Yachts; How EY Can Handle ‘Cheating’ Better | 10.28.24 appeared first on Going Concern.

Firm Watch

Whistleblower says big accounting firm hid evidence that a Saudi co-defendant helped finance 9/11 [Florida Bulldog]
So this is…a lot.
As 9/11 victims await a federal judge’s decision on whether Saudi Arabia should be dismissed as a defendant in their massive civil action, “serious” allegations have emerged that a global accounting firm covered up evidence that a co-defendant “was involved in financing the 9/11 terrorist attacks.” An anonymous whistleblower’s letter to a plaintiff’s lawyer involves a forensic accounting expert for the defense, Jonathan T. Marks, who was retained by the Saudi-based World Assembly of Muslim Youth (WAMY) to review records produced during the litigation related to claims made against WAMY and testify about his findings. WAMY, whose U.S. chapter in Virginia was founded in 1992 by a nephew of Osama bin Laden, is a Saudi-funded charity that promotes Islamic teachings and encourages Muslims to be more religiously observant, according to the Pew Research Center. It is “widely regarded as promoting the strict Wahhabi brand” of ultra-conservative Islam, the center said in a 2010 report. An Oct. 9 letter to presiding U.S. Magistrate Sarah Netburn from lawyers for both the 9/11 families and companies with commercial loss claims says the whistleblower “asserts first-hand knowledge that Marks and his employer, the accounting and consulting firm Baker Tilly U.S. LLP, with WAMY and its counsel, engaged in wrongful conduct during Marks’ engagement with WAMY. The conduct, as alleged, distorted the evidentiary record, obstructed expert discovery, and undermined the integrity and purpose of the deposition process (here to elicit the expert’s own independent and uninfluenced responses to the questions posed).”

Big Four firm cuts jobs in Tampa in firm-wide layoffs [Tampa Bay Business Journal]
This confirms what we were told about PwC delaying layoffs in Florida due to Hurricane Milton. A source told us Florida people weren’t in the first wave of layoffs that began on October 7.
PwC US laid off some employees at its Tampa offices on Thursday as it moves forward with firm-wide job cuts. The total number of job cuts across PwC’s three Tampa offices that occurred on Thursday is unclear, according to former employees who spoke with the Tampa Bay Business Journal.

Vault Releases Its 2025 Internship Rankings [PR Newswire]
Vault, the leader in data-driven employer rankings and reviews, today released its 2025 Internship Rankings, highlighting the top programs in more than 30 categories. Vault’s rankings include the Most Prestigious Internships, Best Overall Internships, Best Internships by Key Employment Factor, Best Internships for Diversity, Best Internships by Role, and Best Internships by Industry. The rankings were derived from Vault’s Summer 2024 Intern Survey, which polled almost 20,000 interns at nearly 300 companies. For the second year in a row, New York-based accounting firm PKF O’Connor Davies took the #1 spot on Vault’s Best Overall Internships list. Interns at PKF O’Connor Davies were especially satisfied with their Quality of Life and Compensation. Other accounting firms in the Top 10 Best Overall Internships are Texas-based Weaver, Alabama-based BMSS, and Wisconsin-based Wipfli.

Regulator clears four of nine PwC tax agents over leaks scandal [Australian Financial Review]
The tax agents’ regulator has cleared four of the nine former PwC tax agents it was investigating in the firm’s tax leaks scandal, with five other investigations expected to be finished by the end of the year. The Tax Practitioners Board, which regulates the country’s tax agents, told parliament on Thursday it is still investigating links to overseas partners who received confidential government information as part of its ongoing inquiries into potential wrongdoing by former PwC Australia personnel.

Holtec sues former executives and outside accountant for $70 million in damages, reputational harm from criminal probe [Philadelphia Inquirer]
The lawsuit accuses a CBIZ accountant of forming a shadow company with Holtec’s former CFO and general counsel to embezzle funds.

Deloitte Backs New Program To Unlock Seagrass Recovery Financing [Forbes]
Deloitte has teamed up with Climate Impact Partners for a program to fund U.K seagrass recovery and unlock long-term finance to save and reinstate vital seagrass meadows. The program, in collaboration with Project Seagrass and the National Oceanography Centre, will fund critical research across seagrass meadows around the U.K, mapping the ecosystems and developing methods to restore them at scale.

The Future of the Profession

Alternate Path to Be a Licensed CPA Has Wide-Ranging Benefits [Bloomberg Tax]
NASBA president and CEO Daniel Dustin writes:
More than a year ago, an array of experts from my organization, which represents regulators in accounting for the 55 US jurisdictions, alongside its professional counterpart—the American Institute of Certified Public Accountants—began exploring a question that had been percolating on both sides: Was this model keeping pace with the modern marketplace? After months of intense, back-and-forth work, these groups and their stakeholders arrived in September at what we feel is a balanced solution that incorporates an additional route to “fluency” but observes the same timeless know-how we’ve come to expect of a CPA. We’re calling this additional route a competency-based experience pathway. It still requires a bachelor’s degree and one year of general experience. But it now allows for a year of work experience to function as a means by which accountants achieve the seven competencies long associated with the profession: ethical behavior; critical thinking and professional skepticism; communication; collaboration, teamwork, and leadership; self-management and continuous learning; business acumen; and a technology mindset. Passage of the CPA Exam, as with all our pathways, remains a benchmark.

KPMG CEO Paul Knopp Visits Bentley to Discuss the Future of the Accounting Industry [Bentley University]
Paul Knopp, U.S. chair and chief executive officer at KPMG, visited Bentley for a conversation about the evolving accounting profession — including certified public accounting (CPA) requirements and artificial intelligence (AI) — and the outlook for college graduates entering the field. Knopp talked with small groups of students and professors in their classrooms before joining President E. LaBrent Chrite for an on-stage discussion in the Koumantzelis Auditorium. “There’s no doubt that as I talk to other leaders around the world there’s been more focus lately on how we accelerate the development of interpersonal skills, soft skills, communication skills — those other skills that have become increasingly important,” said Knopp, who spoke at Bentley a day after making international news in the Financial Times as the first Big Four accounting firm CEO to call for replacing the fifth year of accounting education with an apprenticeship. The number of U.S. accounting undergraduates has dropped to its lowest level in 15 years, and the number of people taking the CPA exam has fallen as graduates opt for high-paying jobs in financial services, tech and other industries.

A Brief Message From Management

Hey people,

We're looking to speak to former Intuit employees let go in the last batch of layoffs who have had issues with unemployment claims due to the company attempting to block them.

DM here or use our contact info in bio. Anonymity is assured.

— Going Concern (@going_concern) October 23, 2024

Local

Potsdam village officials to begin search for new auditing firm [North Country Now (New York)]
The country-wide municipal mess continues…
The village [of Potsdam, NY] is looking for a new firm to complete its annual fiscal audit. Village Administrator Isabelle Gates-Shult told board members at their meeting Monday, Oct. 22 that the municipality’s normal firm, Potsdam-based financial firm Pinto Mucenski Hooper VanHouse & Co., CPA’s, PC, can no longer complete the audits due to staffing issues. The village is searching for a firm that can conduct two audits, one for fiscal year 2022-2023 and for the current fiscal year, 2024-2025. “We received news that our external auditor that is assigned to our annual audit is resigning and the firm does not have sufficient staffing to take over our 2022-2023 audit,” Gates-Shult said.

State audit shows Butler County residents overtaxed by nearly $223,000 over 3-year-period [KFVS (Missouri)]
An audit by Missouri Auditor Scott Fitzpatrick finds Butler County residents were overtaxed by approximately $222,770 over a three-year period. Fitzpatrick says the audit shows the County Clerk failed to accurately calculate the property tax levy reduction amount collected for 2020, 2021 and 2022. According to the audit report, Butler County voters had previously enacted a one-half cent sales tax with a provision to reduce property taxes by 50 percent of sales taxes collected but, when calculating the reduction, the County Clerk did not account for the difference between estimated and actual sales taxes collected for the preceding year.

Portland schools to pay accounting firm $500,000 to resolve retirement plan issues [WGME (Maine)]
Portland Public Schools said this week it will spend half a million dollars to contract with an outside accounting firm to help resolve ongoing issues with payments to the state retirement system. Late last year, Portland Public Schools hired the accounting firm BerryDunn to support its finance team amid the ongoing payroll problems. The firm has also been tasked with helping to rectify the retirement plan issues. Now the district is hoping to enter into another one-year contract with BerryDunn, with the hope of resolving the remaining issues with MainePERS.

NJ tells Clifton it can’t audit its finances until it has the money to do so [NorthJersey.com (New Jersey, duh)]
The state Department of Community Affairs has ruled that the city needs to wait to authorize a forensic audit of its finances until it has the necessary funds, which won’t be available until after Nov. 1. Council members, impatient that the administration had yet to award an auditing contract, recently took the matter into their own hands and voted 4 to 3 to award it to the Holman Frenia Allison firm. In doing so, the council majority ignored the administration’s warning that such a measure was prohibited by state law. Councilman Joe Kolodziej said he voted against awarding the contract partly because as a certified financial officer, he has to follow state law. His other reason, he said, is that the forensic audit is overkill. “I’m in favor of a financial management study, but I’m opposed to paying forensic audit prices for it,” Kolodziej said. “The public is being deceived, and we could get the same result for half the price if we actually asked for proposals for a study.”

NYC handed out $6.5 million in tax breaks to ineligible homeowners, comptroller says [Gothamist (New York)]
New York City’s Department of Finance mistakenly handed out $6.5 million in tax breaks to the ineligible owners of hundreds of co-op and condo units over the past five years, according to a new audit by the city comptroller’s office. The auditors found the finance department granted the improper tax breaks through the Cooperative and Condominium Tax Abatement program, incorrectly waiving payments for owners of at least 678 condo and 42 co-op units who didn’t meet program requirements during the 2023 fiscal year. To qualify, owners must designate the unit as their primary residence and own no more than three units in the same building.

Rules and Regs

FASB advances credit loss accounting relief for private firms [CFO Dive]
The Financial Accounting Standards Board has agreed to move ahead with a proposed standards update aimed at simplifying how private companies and most not-for-profit entities account for credit losses when it comes to current accounts receivable and contract asset balances stemming from revenue transactions, according to a recap of tentative board decisions made at the U.S. accounting standard setter’s meeting last week. The board also set a 45-day comment period for the update.

Firms Battle Global Deals Accounting Changes Backed by Investors [Bloomberg Tax]
Companies oppose being forced to disclose in financial statements how well their business acquisitions have performed, according to responses to a public consultation by global standard-setters. Investors had supported the International Accounting Standards Board’s March proposal, saying it would help them assess acquisitions. The board’s plan would require companies to publish full details of post-acquisition performance against targets in the notes to their financial accounts.

Deloitte study: seven out of ten multinationals expect an increase in public reporting on tax as a result of recent regulations [Deloitte]
More than two thirds of companies worldwide (70%) expect an increase in public reporting on tax, as a result of the numerous regulations adopted in recent years, making data transparency and compliance with authority requirements the main challenge they currently face, according to Deloitte 2024 Global Tax Policy Survey. Digitalization of tax was ranked as the second most significant challenge, but expectations are optimistic regarding this matter – 59% of participants in the survey see the potential of e-invoicing and digital reporting for trade to simplify tax compliance, even with the need for significant investment. However, 10% believe the effect will be the opposite. The third major challenge for multinationals is related to the international tax reform, comprising the two-pillar agreement signed under the coordination of the Organization for Economic Co-operation and Development (OECD), but also the digital service taxes and the United Nations (UN) initiative for international tax cooperation, recently launched in response to the developing countries’ request. Thus, 54% of participants in the survey expect more complexity in tax reporting under Pillar II of the OECD reform (the global minimum corporate tax), which will be implemented over the next three years.

Tenth B.C. public company auditing firm fined, censured by U.S. regulator [Vancouver is Awesome]
Another Vancouver-headquartered public company auditing firm has recently been penalized by the United States regulator overseeing market regulations, bringing the total to 10 such companies since March 2021. Additionally, another firm, headquartered in Toronto but with offices in B.C., has been penalized for work it conducted on a B.C.-registered firm. “This latest round of orders shows that firms cannot neglect their responsibilities to keep audit committees informed and report required information to the PCAOB,” said Robert E. Rice, director of the PCAOB’s division of enforcement and investigations.

Talent

Attention firms big and small alike! If you’re in the market for talent, look no further than Accountingfly’s accounting candidates of the week. Whether you’re looking to hire an accountant ASAP or just window shopping, sign up for the Always-On service to get great candidates available for hire every week in your inbox. It’s free!

AI

Students using generative AI confess they’re not learning as much [KPMG Canada]
59 percent of 423 Canadian students surveyed use generative AI in their schoolwork, compared to 52 percent in 2023. That’s a year-over-year increase of 13 percent; 75 percent say generative AI tools have improved the quality of their schoolwork; Over two thirds (67 percent) of students using generative AI say they don’t think they are learning or retaining as much knowledge; 82 percent admit that they claim generative AI content as their own work; 70 percent say they are turning to generative AI tools for help rather than asking their instructors.

Thomson Reuters acquires agentic AI accounting assistant firm Materia [Silicon Angle]
Founded in 2022, Materia provides AI assistants that help accountants automate knowledge work for tax, auditing and research to improve their effectiveness when working with clients. The company does so by using a new AI methodology called “agentic workflows,” where AI does more than provide summaries and answers, but can also perform actions without human intervention for generating reports, emails, analysis and more. Thomson Reuters Ventures, an early investor in Materia, assisted in building proof-of-concepts for Materia’s AI assistant. The investor participated in Materia’s $6.3 million funding round in June this year, which was led by Spark Capital.

The post Friday Footnotes: Baker Tilly Did What!?; Internship Ranking Winner Same As Last Year; Pillar II to Be a PITA | 10.25.24 appeared first on Going Concern.

Citrin Cooperman is one of the several top 20 accounting firms to have sold a stake to private equity in recent years. In 2022, they announced a majority investment from New Mountain Capital, the same firm that is invested in Grant Thornton and which is backing Grant Thornton US’s merger with Grant Thornton Ireland (we still don’t know wtf is with these firms doing cross-border mergers with each other). Citrin Cooperman’s private equity investment was one of the earlier large deals that followed EisnerAmper kicking this whole PE trend off in 2021.

Citrin Cooperman was named #11 on Accounting Today’s 2023 Fastest Growing Accounting Firms in the US and has 250 partners and 1,300 employees across 16 locations in the United States and India. Since the New Mountain Capital investment, they’ve pumped revenue up from $352 million to $674 million — with an assist from the Berdon merger in early 2023 that brought $133 million in revenue to the table — and ascended several spots on IPA’s Top 100.

A month ago the firm’s India branch announced the opening of a brand new office in Hyderabad on LinkedIn.

Our condolences to anyone cut from the roster this week. Trust that better things are right around the corner.

The post Layoff Watch ’24: PE-Backed Citrin Cooperman Let Some People Go This Week appeared first on Going Concern.

That firm? Allegedly it’sIPA Top 100 #47 Cohen & Company of Cleveland (revenue of $153,896,588). We’re told they did an internal announcement today and will make the news of a minority investment from Lovell Minnick Partners public tomorrow.

Of themselves and their investment strategy Lovell Minnick says:

Lovell Minnick Partners (“LMP”) invests in growth-oriented companies. We partner with founders and leadership teams to accelerate value creation through organic growth and strategic acquisitions, positioning their businesses for long-term, sustainable success.

Along with our own deep operating experience, we leverage a robust network of value creation team members, riverguides, our Advisory Council members, and third-party consultants to drive our distinctive value creation playbook with essential planning that starts pre-investment.

Since our inception in 1999, we have raised over $5+ billion of committed capital, invested in over 50 companies and completed over 200 add-on acquisitions. LMP invests in growth-oriented, middle-market companies in the financial services, financial technology and business services sectors.

LMP’s portfolio here. It seems they really, really like the asset management space.

Before you grab the pitchforks and bemoan the slow death spiral of public accounting as we know it, our tipster seems to think this deal isn’t a bad one (“I have a great deal of respect for the firm. They are good people,” our tipster said) and is primarily a growth strategy. We’re told the partners will of course be getting a little cash out of the deal but that this is not a senior partner “f you I’m out” cashout like we’ve seen with, uh, other firms. In addition, our tipster says that staff will be getting bonuses themselves as part of this deal. Nice.

Cohen & Co. ranked #25 on the most recent Most Prestigious Accounting Firms ranking from Vault and has about 800 professionals in 12 offices across seven states.

Staff and partners are welcome to reach out anonymously via email or text. We’ll update should a press release make an appearance.

Update: Aaaand here it is:

Cohen & Company, a nationally recognized assurance, tax and business advisory firm is pleased to announce a strategic growth investment by Lovell Minnick Partners (LMP). LMP is a private equity firm focused on investments in financial services, business services and financial technology companies. This investment will help meet the growing needs of Cohen & Company clients across the firm’s many key industries and geographic markets, and provide capital for important investments in technology and expansion of service offerings.

“LMP will be a valuable strategic partner, offering a unique perspective on our industry and the clients we serve, along with a dedicated focus on human capital, which is crucial to our growth strategy as an employer of choice,” says Cohen & Company CEO Chris Bellamy. “We are proceeding with conviction into this new chapter, motivated to work harder than ever for our stakeholders — our clients, our employees and our communities — to honor their trust in us and deliver value to these critical relationships.”

“Cohen & Company’s vision for the future and its longstanding reputation as a premier accounting, tax and advisory firm make them an ideal partner,” says Jason Barg, partner at LMP. Tom Hutchins, principal at LMP, adds, “We are excited to collaborate with Chris, the management team, employees and clients to continue to build on their successes and support their growth trajectory.”

This event marks the first institutional capital investment for Cohen & Company. The investment is expected to close on December 31, 2024, at which point the firm will also substantially increase the number of employee equity holders. “We are extremely proud to reward our exceptional team for the successes that have brought us to this point,” says Bellamy. “The increase in equity holders, combined with substantial reserves for future equity-based incentives, will further strengthen alignment as we work together to achieve our strategic goals.”

The post Cohen & Co. Confirms a Private Equity Investment From Lovell Minnick Partners (UPDATE) appeared first on Going Concern.

Grant Thornton Ireland and Grant Thornton US are to merge their advisory and tax businesses, in a deal backed by New York private equity firm New Mountain Capital.

New Mountain Capital is the same private equity firm that took a majority state in our GT in March.

The GT Ireland business has about 2,800 staff, which includes 72 partners. As always with these kinds of deals, the audit side will remain its own thing.

Talk had been that GT US wanted to merge with Grant Thorntons UK and Ireland both, no word on what happened with the other half of that potential tie-up.

Grant Thornton Ireland and US firm to merge non-audit businesses [Irish Times]

The post Grant Thornton Merges With Grant Thornton appeared first on Going Concern.

Posts from the big4
community on Reddit

Well now Financial Times is reporting a bunch of people got swept up in a wave of CPE policing centered around their taking multiple courses at the same time during EY Ignite Learning Week in May. “We all work with three monitors. I was hoping to hear new ideas that I could bring to the table to separate myself from others,” said one of them to FT. Mission accomplished?

The recently shitcanned “did not believe they were violating EY policy and were just trying to take advantage of interesting sessions that ranged from ‘How strong is your digital brand in the marketplace?’ to ‘Conversing with AI, one prompt at a time’,” said FT.

As we know, the EY organization is extra sensitive to cheating after they received a record $100 million fine from the SEC in 2022. In that instance it wasn’t so much the cheating itself that got the SEC so worked up but the fact that EY knew of it happening and failed to inform the SEC of such when the SEC asked “are your people sharing answers?” Also that they weren’t just sharing answers on CPE, they were using an exploit that would give out a passing score even if you only answered one question right. “Many professionals acknowledged during the firm’s investigation that they knew their conduct violated EY’s Code of Conduct, but they cheated because of work commitments or an inability to pass training exams after multiple attempts,” read the SEC’s order. Hmm, we’re sensing a theme here.

Apparently the firm did warn staff not to take multiple sessions at once in this most recent case — some of the former EYers speaking out disputed this — but whether they did or not, staff were just demonstrating that go-getter culture of the Big 4. “EY ‘breeds a culture of multitasking’, said one of the axed employees to FT. “If you are forced to bill 45 hours a week and do many more hours of internal work, how can it not?”

“I know a partner who will do two [client] calls and switch their camera on and off depending on who he is talking to. If this is unethical, then that is unethical, too,” said another. Are we sure the partner isn’t overemployed?

Would giving people two weeks off to complete their required 40 hours of CPE perhaps begin to address this pervasive issue once and for all?

EY fires staff who took multiple online training courses at once [Financial Times]

The post Studious EY Employees Just Trying to Grind Out CPE Get F**king Fired appeared first on Going Concern.

Grant Thornton UK has begun sounding out private equity firms over a potential deal that could see them buy into the business, which is jointly owned by more than 200 partners.

Grant Thornton UK, which employs more than 5,000 people, said it was not “actively engaged” in a transaction but that it “continually evaluates” the business landscape.

The firm is said to be working with advisers from Rothschild, which declined to comment.

Shortly after that, out came a story suggesting that Grant Thornton US was in the market to buy their Brit and Irish cousins across the pond. This is from “Grant Thornton explores three-way merger,” published by Financial Times in the latter half of July:

Under the three-way merger plan, the current partners of the UK and Irish firms would become shareholders in an international holding company led by Grant Thornton’s US private equity owners and partners. Relative valuations of the firms had yet to be discussed and the UK and Irish firms could decide to pursue different deals or none, according to people familiar with the matter.

The UK firm has already hired Rothschild to explore options for its business. Bankers have begun seeking expressions of interest from private equity firms that could provide an alternative to a merger with the US firm.

Our take on that: Grant Thornton Wants to Have a Threesome?

In the weeks and months that followed, several more stories came out about this alleged heated battle to buy (literally) Grant Thornton UK’s heart. We don’t need to link them all but here’s a recent one. Sky News put this out on October 15:

A trio of buyout firms have been shortlisted to buy a stake in the UK operations of Grant Thornton, one of Britain’s six biggest accountancy firms.

Sky News has learnt that Cinven, EQT and New Mountain Capital – the backer of Grant Thornton’s US business – have made the cut in a process that could value the UK firm at more than £1.5bn.

Other contenders, including Permira and Carlyle are said to no longer be in contention, although insiders cautioned that the list was subject to change.

Oh my God just sign something already. It sounds to us like someone or someones at Grant Thornton is/are desperately trying to seed rumors of a bidding war among private equity firms vying to be the lucky one to win a piece of Grant Thornton. No other firm has dragged out this song and dance, they do the thing and move on. Please try that, GT.

Related:

The post Sh*t or Get Off the Private Equity Pot, Grant Thornton appeared first on Going Concern.

To our knowledge, no photos of a mustachioed Joe Echevarria circa 1980 are floating around the internet so you’ll have to use your imagination with this horribly dated commercial.

That story comes from a 2013 Fortune interview in which the Bronx born-and-raised Echevarria reveals he had “rough edges” and desperately needed to acclimate to the polished culture of Big 8 (as we know, that’s now down to 4) if he was going to go the distance:

I had a big mustache and bad hair. Also, I had two suits, one brown and the other green polyester. I had no social graces, either — I didn’t know where the bread plate goes on a table, had never drunk coffee out of a cup with a saucer. It took me a long time to realize that these things matter in the corporate world. No one was willing to tell me.

Until a boss — who he refers to as “mom” in the interview — set him straight:

I had a boss, a Hispanic woman, who gave me good advice. Right before I left on vacation, she said to me, “You’re coming back without that mustache. You will never make it into management if you look like the Frito Bandito.” I had never realized that was holding me back.

In that same interview, he also calls his alma mater the University of Miami “a not-so-great school” (“it was nicknamed Suntan U.”) but they must not have been too pissed about that because they just named him actual president and no longer just an acting one. He’s the seventh president of UM and the first alumnus (’78) to hold that title.

Prior to this he served on the UM Board of Trustees from 2012 to 2019 and became Chief Executive Officer of UHealth in 2020 followed by CEO of the whole university two years later.

Nobody bleeds orange and green like Joe Echevarria!!

Congratulations on being named the seventh president of the @univmiami! pic.twitter.com/m2xUoejqaR

— Miami Hurricanes (@MiamiHurricanes) October 18, 2024

Reaction to the news on social media seems mostly positive except these people in r/professor griping about “how corporate universities have become.”

Joe Echevarria named seventh president of the University of Miami
byu/TheProfessorO inProfessors

Fans of Miami Hurricanes football seem particularly pleased with the appointment.

“Excellence, continuous improvement, and impact are more than shorthand for rising to our immense potential. Those words remind us that unless we are giving our very best—in academics, in research, in patient care, and in athletics—we are not worthy of ‘The U.’”

— Joe Echevarria pic.twitter.com/BoyDsUiapF

— GO ‘CANES! (@83_87_89_91_01) October 21, 2024

“[Coach Mario Cristobal] is the right person at the right time.”

— President Joe Echevarria pic.twitter.com/cP66cquQ7D

— GO ‘CANES! (@83_87_89_91_01) October 20, 2024

What better time then after a win to welcome our new @univmiami president?

Thanks for being right there with us for our victory against Louisville, President Joe Echevarria! #GoCanes pic.twitter.com/v0lwTYqyI0

— Miami Hurricanes Football (@CanesFootball) October 20, 2024

It’s been ten years since Joe surprised everyone by dipping out of Deloitte at the end of his first term as CEO despite not having reached mandatory retirement age. Joe said he left so he could focus on his “passion for public service” but some people floated the idea that he wouldn’t have been able to secure re-election had he stayed. Whatever the reason, seems he’s doing just fine these days.

For those who weren’t around back in those days, please enjoy this small selection of Joe Echevarria lore:

• Unfounded Crackpot Theory of the Day: Did Joe Echevarria Want to Stick It To Deloitte?
• Joe Echevarria Was a Hipster Before It Was Cool
• Deloitte CEO Joe Echevarria Doesn’t Want to Hear About the Troubles You’ve Had Selling Your House
• We Read This Awful Interview with Deloitte’s Joe Echevarria So You Don’t Have To

The post It’s a Good Thing Ex-Deloitte CEO Joe Echevarria Already Had Green in His Blood appeared first on Going Concern.

INSIDE Public Accounting released a batch of facts and figures they’ve collected from their industry-leading survey of the country’s accounting firms — about 600 participated in 2024 — and this bit stood out to us as of particular interest to our audience given that a majority of our readers are under age 50.

See if you agree:

Employees aged 60 and older account for 11% of staff across all revenue bands, down from 12% last year. Fifty-five percent of staff are under 40 with 30% of staff under 30. Recruiting costs as a percentage of net revenue are less than 1% for firms at all revenue sizes.

With the oldest millennials having crossed the threshold of 40 a couple years ago, this means more than half of staff at accounting firms are millennial or younger. Some of the under 30s are millennials as well, we’ll have to wait until Gen Z starts turning 30 in the year 2027 for that figure to exclude millennials.

Generation X will not be surprised to see they’ve been ignored in the figures IPA chose to share. Sorry, mid-40s to late-50s. You’re used to it.

• 60 or older: 11% (down from 12% in 2023)
• Under 40: 55%
• Under 30: 30%

There’s a bunch more at the link below, things like how many firms have a formal process to cull clients, how many firms offer business development incentives to staff and/or partners (a lot actually), and what percentage of firms are exploring AI versus what percentage are taking the watch and wait approach.

IPA Data Dive: Snippets From the INSIDE Public Accounting Internal Operational Reports [INSIDE Public Accounting]

The post Gen X? Never Heard of Them! Accounting Firms Are Overrun by Millennials and Gen Z appeared first on Going Concern.

Yesterday Financial Times published a story about PwC UK’s top consolation prize:

Senior PwC staff in the UK who will never be partners are to be offered a new “managing director” title as the Big Four firm seeks to keep top employees whom it is unwilling to admit to its £1mn-a-year partnership.

People familiar with the matter told the Financial Times the UK firm had introduced the new grade to hold on to a key layer of senior accountants and consultants and to bring in external hires with higher salaries.

However, the role would not serve as a stepping stone towards becoming partner as managing directors would be ineligible for promotion to the top rank, they added.

The University of Miami has chosen permanently-jumpscared-looking former Deloitte CEO Joe Echevarria as president:

“Joe knows and understands complex institutions,” stated Manny Kadre, chair of the UM Board of Trustees. “Joe’s vast experience in managing complexity is evident from his 36 years at Deloitte LLP, a global provider of professional services, where he led tens of thousands of professionals in more than 100 cities across five continents and multiple industries. Here at the U, he has immersed himself in our academic environment, working closely with faculty and academic leaders, diving deep into our processes, and empowering the teams closest to our mission to strive for excellence.”

As acting CEO, Echevarria supported transparency and supported academic faculty, Kadre said.

In a matter of weeks, we should be hearing that the Pentagon has failed yet another audit. Defense One argues this is a good thing:

Far from a mere compliance exercise, the cultural and technological changes required to pass an audit are the same ones necessary to keep U.S. forces dominant.

For the Defense Department to pass its audit, it must account for more than dollars. It must track the vast array of things the military uses: munitions, spare parts, fuel, real estate. Moreover, it must track the condition of these things: In the shop? Ready for use? In the field? And it must do so accurately and in real time. All this requires comprehensive changes. Cyber security must be improved, systems integrated, processes and automation deployed to ensure the accuracy of data, and more.

Undaunted, DOD has attacked these problems with resolve and money. Over the past five years, the department has spent more than $4 billion to improve visibility and transparency. Efforts to pass the audit have helped integrate data from finance, logistics, and readiness systems, breaking down longstanding silos and making it possible to see across the entire defense enterprise. What was once a cumbersome and time-consuming process—yielding outputs that were neither timely nor reliable—has become more streamlined.

Earlier this year, the Marines became the first US military branch in history to receive a clean audit opinion.

The AICPA has established a scholarship named after outgoing president, CEO, and vintage waffle iron collector Barry Melancon:

The AICPA Foundation has launched the Barry C. Melancon Professional Accounting Research Fellowship to support the next generation of accounting and finance professionals with the skills, knowledge and training to advance the accounting and finance profession. The Fellowship has been established as a legacy of Barry Melancon’s 30-year leadership tenure at the AICPA & CIMA as well as his dedication, advocacy and future-focused commitment to the profession.

“I have been fortunate to spend my career as an advocate for our great profession. The passion that I have had for the profession and the spirit of everything that I did was for the betterment of the profession and the people within,” noted Barry Melancon, President and CEO of the AICPA and CEO of the Association. “It is a personal joy to be able see the creation of a Fellowship in my name to encourage others to contribute to the profession’s benefit, advancement, and future.”

In survey news, Deloitte released one this morning.

A new external survey released today by Deloitte zeroes in on what many employees are looking for in corporate learning and development opportunities — and where organizations might be missing the mark. The inaugural survey found that while 87% of workers see human skills like adaptability, leadership, and communications as integral to their career advancement, only around half (52%) think their company values employees with human skills more than those with technical skills.

In addition, 3 in 5 surveyed employees believe their company focuses more on immediate business needs than providing the training they may need for long-term success. This could signal challenges for companies down the line, with 94% of respondents expressing concern that future generations will enter the workforce without the necessary human skills.

“Organizations that overemphasize technical training at the expense of enduring human capabilities — like divergent thinking, emotional agility, and resilience — could end up impeding innovation and leaving employees ill-equipped to lead teams, adapt to market opportunities, and fully harness the potential of technology,” said Anthony Stephan, chief learning officer, Deloitte US. “Technical and human skills are symbiotic, which is why leaders should take a ‘Yes AND’ approach — for the investments they make in tech skills, developing an equally exciting and critical human skill experience.”

This guy thinks CISOs need their own GAAP:

If CISOs are really going to elevate their position in the C-suite and truly drive meaningful discussion about cyber risk, they’re going to need to have the same rock-solid level of reporting that their brethren in the finance department bring to their board discussions. Financial reporting data has become extremely structured and repeatable across all enterprises because it’s guided by the standards set out through generally accepted accounting principles (GAAP), which are governed by the Financial Accounting Standards Board (FASB). Everybody measures the same things, in the same way. Doing this makes it hard to cook the books and easy to ensure that the yardstick reads the same way no matter the business.

I believe that we’re going to need to get to a place where we have GAAP-style accounting for security monitoring. This may seem like a tough ask to make of the industry—standards battles are always long and never pretty. But we’re getting to a point where regulators, insurance companies, and veteran risk executives will scramble to find a way to make it happen because there’s such a dire need.

If we can get to a consensus of generally acceptable security monitoring practices, setting out a standard reporting structure it becomes easier for auditors to check best practices, for insurers to get real-time snapshots into exposure levels, and for CISOs to easily translate exposures into financial risk quantification that makes sense to the board. This kind of ground-truth reporting is crucial for next-generation security executives to have the right conversations with the board about how to prioritize where resources should go first, what it’s going to cost, and the next steps organizations need to take.

ICYMI: American Institute of CPAs (AICPA) and the National Association of State Auditors, Comptrollers and Treasurers (NASACT) suggest state and local governments step it up to beat the talent shortage. Press release:

State and local governments are being squeezed by a shortage of accounting professionals, making it difficult at times to find staff CPAs who can prepare critical financial information or outside firms to conduct audits. Addressing this problem will require a multifaceted approach, including educating legislative bodies about the value of the CPA, offering competitive salaries for CPAs in government and fees paid to outside auditors, and reviewing the thresholds that trigger certain kinds of audits, according to a joint report by the American Institute of CPAs (AICPA) and the National Association of State Auditors, Comptrollers and Treasurers (NASACT).

“We have a talent shortage in accounting that affects business as a whole, and many of the pipeline initiatives the profession is putting in place will help the public sector as well,” said Susan Coffey, CPA, CGMA, the AICPA’s CEO of public accounting. “But accountants who do government work face unique challenges that require more specialized solutions. The public deserves to know its tax dollars are being spent as intended — and that requires strong government finance teams and experienced auditors.”

One key issue is that government and private sector accounting and auditing standards often differ, so CPAs working in the public sector require specialized expertise. Yet salaries and audit fees are often well below those offered in the private sector, the report found. State and local governments also don’t always understand the value CPAs bring to finance teams and the audit process, so hiring is often driven by a cost-savings approach, rather than a focus on the qualifications that an experienced staff accountant or outside auditor may bring.

And Journal of Accountancy article:

The report, Public Sector CPA Resources: The Current Landscape and Recommendations for the Future, is built on the efforts of a joint working group that gathered insights from a series of forums and a comprehensive survey. The report ranked a lack of competitive compensation and the need for specialized government technical expertise as key factors stymying governments in the hiring and retention of CPAs.

Fifty-six percent of 450-plus survey respondents employed in accounting, auditing, or finance at a state, local, or tribal government entity said compensation concerns have a large impact in this area. One respondent who works in local government commented that accounting professionals “can make double doing anything else.”

Further, 63% of government respondents agreed that the technical expertise required of CPAs in the public sector had a large or moderate impact on the challenge of hiring and retaining qualified professionals.

In municipal messiness, the city of Sturgis in South Dakota is bringing on an outside accountant to help them with their accounts:

In a recent audit report conducted by accounting firm Ketel Thorstensen, it was revealed that the city has not reconciled all of their bank accounts since 2023.

To help dig them out of their financial problems, the city approved a $15,000 contract with CPA firm Casey Peterson and Associates during a council meeting two weeks ago.

A public accountant from the firm will be on contract until December to help Sturgis get caught up with their finances.

Allegedly the problem is some issue with their accounting software. Yeah, everyone says that.

In late August, the South Dakota Department of Revenue released its tax collection numbers for the 2024 Sturgis Motorcycle Rally and revealed the yearly gathering of bikers brought in $1,399,501 in revenue generated from state sales tax, tourism tax, municipal sales tax, and municipal gross receipts tax.

Al Pacino has put out a memoir. I wasn’t planning on reading it but I’m tempted now. Variety on how Pacino’s shady accountant made him broke and desperate:

Al Pacino writes in his recently-published memoir “Sonny Boy” that he was forced to make dramatic career changes after losing all of his money due to a corrupt accountant who eventually served seven and a half years in prison for running a Ponzi scheme. The accountant mismanaged the Oscar winner’s funds, bringing Pacino’s savings from a staggering $50 million to zero dollars.

According to Pacino, it was in 2011 when he started “to get warnings that my accountant at the time, a guy who had lots of celebrity clients, was not to be trusted.” The actor was already paying “a ridiculous amount of money to rent some big fancy house in Beverly Hills,” and then he took his entire family on a trip to Europe where he flew various guests overseas “on a gorgeous Gulfstream 550” and “rented out a whole floor of the Dorchester hotel in London.”

When Pacino returned to his Hollywood home, he became suspicious after realizing his finances had not dramatically changed despite spending so much on vacation. “And I thought, It’s simple. It’s clear. I just know this. Time stopped. I am fucked,” he writes.

Maybe I’ll buy it and jam it in there on the bookshelf next to Retail Gangster.

“There isn’t a better time to be getting into the CPA profession, in part because there’s a lot happening,” says Zach Donah, president and CEO of the Massachusetts Society of Certified Public Accountants (MassCPA).

Due to a growing global business environment, an increase in part-time services and a rising need for companies to meet environmental, social and governance (ESG) criteria, the accounting profession is expected to grow 6% over the next decade, Donah said. That outpaces the overall projected job growth over the next decade, according to the U.S. Bureau of Labor Statistics.

Data nerds will delight in some figures released by INSIDE Public Accounting:

At 67% of participating firms, partner agreements have been updated within three years; at 27% of firms these agreements have been updated within the last 12 months; and at 7% of firms they haven’t been updated in 10 years or have never been updated.

Fifty percent of participating firms have a formal process to cull clients. Of those that culled clients, firms on average reduced their clients by $290,000. For firms over $30 million, the average revenue culled was $630,000, or a little over 2% of revenue.

Eighty-one percent of firms offer business development incentives to staff and/or partners. In 37% of firms, these incentives are paid out for a year for new clients while in 13% of firms, staff receive incentives for the life of the client.

For more news, check out Friday Footnotes, published here every Friday at 5pm Eastern. Last Friday’s Footnotes: The Profession’s Ethics Dilemma; Co-Pilot Called Out in Court For Calculations; Audit Uncovers File Called ‘Twilight Zone’.

That’s it for now on this chilly October morning. Feel free to reach out via email or text if you see an interesting story we should be talking about, have a tip to share, or just want to vent. You may also send any comments, concerns, or compliments in my direction but be gentle, I’m more sensitive than I let on.

Have a great week!

The post Monday Morning Accounting News Brief: PwC Consolation Prizes; Al Pacino’s Accountant Ripped Him Off | 10.21.24 appeared first on Going Concern.

Firm Watch

Accountancy firm BDO fined €1.3 million for work with Russian-held football club Vitesse [NL Times]
The fine is regarding the work that BDO did as an accountant for football club Vitesse, and a holding company of the former owner of the club, Russian businessman Valeri Oyf, sources told FD. There are said to have been murky cash flows surrounding deposits of 6.2 million euros, FD reported on Wednesday. BDO was supposed to report an unusual transaction to the national Financial Intelligence Unit in 2020. That is the reporting point in the Netherlands for potentially suspicious transactions that may be linked to money laundering or other criminal activity. BDO is going to appeal the decision.

Private equity-backed Citrin Cooperman to acquire CT accounting firm [Hartford Business Journal]
Woodbridge-based accounting and consulting firm Teplitzky & Co. has entered into an agreement to be acquired by New York-based professional services firm Citrin Cooperman. Under the agreement, Citrin will acquire substantially all the assets of Teplitzky & Co. P.C., located at 1 Bradley Road in Woodbridge, the firms said Thursday. Financial terms of the agreement were not disclosed.

Practice Management

Most accountants see ethical challenges increasing: ACCA [CFO Dive]
Most accountants see ethical challenges growing more complex throughout their profession as technology speeds the expansion of businesses worldwide, exposing regional differences in law and culture, the Association of Chartered Certified Accountants said. Nearly one-in-four accountants (24%) have faced pressure to act unethically during the past three years, and 55% of finance executives have witnessed unethical behavior during their careers, the ACCA said Monday, reporting on a global survey.

An untethered workforce is the future, EY says [HR Dive]
As the global workforce continues to evolve, talent acquisition and retention will shift toward personalized employee experiences and expectations rather than typical rewards and physical work locations, according to an Oct. 11 report based on EY’s 2024 Work Reimagined Survey. For instance, 38% of employees said they’re likely to quit in the next year, which will require company flexibility and a plan for talent flow. This means untethered culture, expanded rewards and agile skill building will become more prevalent, the report found.

Why ‘Trust’ in Data is Even More Important in an Era of Global Taxes [PwC]
We are in a time of unprecedented change in the global tax and compliance landscape — exemplified by the OECD’s Pillar Two. With implementation now well underway, large multinationals are contending with the world’s first truly global corporate tax system, and it’s placing significantly greater burdens on their co-ordinated data collection and pan-global reporting. Companies are faced with the task of gathering and transforming as many as 330 distinct data points for potentially hundreds of constituent entities for Pillar Two alone. However, Pillar Two is not the only emerging data challenge. Since 2021, the EU’s Corporate Sustainability Reporting Directive (CSRD), which requires large companies to report on their environmental and social impact, has compelled organisations to consider vastly more data points across the different functional areas of their organisation and supply chains. Many of these data points are not currently managed by existing systems or data controls indicating that many organisations’ data strategies, technologies, processes and systems are underprepared.

Talent

It’s the end of the week and you know what that means! No, not a nap. A new batch of remote accounting candidates for hire have been prepared by Accountingfly for your review. They’ve already sifted out the riff-raff, these are the good ones. Sign up for Always-On Recruiting to get more great candidates like these in your inbox every week.

Audit

Auditors found lost human rights cases in file labeled ‘Twilight Zone’ [Times Union]
An audit released Thursday by the state comptroller’s office found the New York State Division of Human Rights had failed to investigate dozens of housing discrimination cases due to poor management that resulted in complaints being lost, mislabeled and unprocessed. Some complaints that were not entered into a case management system were found by Division of Human Rights officials “in a filing cabinet labeled the ‘Twilight Zone,’ where some cases labeled ‘defective’ were filed, meaning they required more information and were not being investigated further,” the comptroller’s office said.

SEC’s Dropped Auditing Charges Shows Damage of Jarkesy Decision [Bloomberg Law]
The Securities and Exchange Commission’s recent decision to drop misconduct charges against a handful of auditors proves the SEC v. Jarkesy ruling threatens the agency’s ability to protect the investing public and to police auditors and public accounting firms that violate their duty of care. The message from the US Supreme Court justices was clear: If you violate the law as an auditor, the SEC is limited in how it can hold you accountable. Yes, laws such as the Sarbanes-Oxley Act are still on the books setting standards for financial recordkeeping and reporting. And in an ideal world, auditors would follow the law without the threat of enforcement, and the need for sanctions, fines, and prohibitions on practicing before the SEC would be superfluous.

Empire State Building owner reports ‘material weakness’ in accounting [Crain’s New York Business]
Empire State Realty Trust last week quietly disclosed “material weakness” in its accounting because of ineffective controls around its computer systems. The issues behind the weakness were at first missed by the landlord’s accounting firm, Ernst & Young, said Douglas Carmichael, an accounting professor at Baruch College’s Zicklin School of Business who reviewed Empire State Realty’s disclosure for Crain’s.

News

Two CPAs Sentenced in Billion-Dollar Syndicated Conservation Easement Tax Scheme [Department of Justice]
Two accountants were each sentenced today to 20 months in prison for their roles in the promotion and sale of abusive syndicated conservation easement tax shelters. According to court documents and statements made in court, Victor Smith was a CPA and founding partner of an Atlanta-based accounting firm. Beginning at least in 2014 and through at least 2019, Smith promoted and sold tax deductions to his wealthy clients in the form of units in illegal syndicated conservation easement tax shelters organized and created by co-defendants Jack Fisher, James Sinnott and others. Smith, along with his firm, sold approximately $14 million in false tax deductions to their clients, causing a tax loss to the IRS of about $4.8 million. He earned $491,400 in commissions from Fisher and Sinnott for his role in the scheme. William Tomasello was a CPA at another accounting firm who, at least in 2015 and through at least 2019, also promoted and sold units to his wealthy clients in these same syndicated conservation easement tax shelters. Tomasello sold approximately $8.5 million in false deductions, causing a tax loss of about $2.3 million. He earned approximately $525,072 in commissions.

79% of CFOs expect net profit growth in 2025 [CFO]
In Grant Thornton’s recently published Q3 2024 CFO survey, more than three quarters (79%) of CFOs said they expect growth in net profits over the next 12 months. Although this figure is a 10-quarter high, CFO confidence is also coming at a four-quarter low. Confidence to meet goals for increased demand over the next twelve months fell 12 points to 51%.

Technology

Could artificial intelligence fuel the future of financial investigations? [Deloitte]
This hypothetical scenario begins in a small bungalow in a suburban town, a seemingly unlikely spot for a sinister plot to unfold. There, Grandma Evelyn’s evening crossword puzzle is interrupted by a soft ping from her tablet. The message claims to be from her beloved grandson, Ethan, who says he is stranded in a prison outside of the country and in desperate need of bail money. Heart pounding, Evelyn watches the attached video message. There, apparently, is Ethan, pleading for help. Without a second thought, Evelyn rushes to her bank. Evelyn withdraws US$25,000 from her life savings and, as instructed earlier, deposits it into seven different Bitcoin ATMs scattered across town. Each transaction sends the cryptocurrency to wallets controlled by a faceless global criminal organization that has never laid eyes, let alone hands, on Ethan. As Evelyn returns home, her relief is short-lived. Another message appears on her screen, this time demanding access to her computer. Before she can react, her device is hijacked, and Evelyn watches helplessly as her bank accounts and retirement funds are drained of US$500,000. The funds vanish into the depths of cyberspace, leaving her financially crippled and emotionally shattered.

N.Y. Court Opines on Use of AI by Experts [Reason]
Although the Court has found [proposed expert witness Charles Ranson’s] testimony and opinion not credible [see below -EV]…, a portion of his testimony bears further and separate discussion as it relates to an emerging issue that trial courts are beginning to grapple with and for which it does not appear that a bright-line rule exists. Specifically, the testimony revealed that Mr. Ranson relied on Microsoft Copilot, a large language model generative artificial intelligence chatbot, in cross-checking his calculations. Despite his reliance on artificial intelligence, Mr. Ranson could not recall what input or prompt he used to assist him with the Supplemental Damages Report. He also could not state what sources Copilot relied upon and could not explain any details about how Copilot works or how it arrives at a given output. There was no testimony on whether these Copilot calculations considered any fund fees or tax implications.

KPMG Australia becomes first company in the world to achieve certification to AI management system standard by BSI [KPMG]
KPMG Australia and BSI Australia today announced that the firm has become the first organisation globally to achieve ISO 420001 (AI) certification by BSI. ISO 42001 (AI) is a new international standard that specifies requirements for establishing, implementing, maintaining, and continually improving an Artificial Intelligence Management System (AIMS) within organisations. One of the first internationally recognised standards for AI, ISO 42001 is administered by the International Organization for Standardization and is the world’s first AI management system standard, providing valuable guidance for this rapidly changing field of technology.

The post Friday Footnotes: The Profession’s Ethics Dilemma; Co-Pilot Called Out in Court For Calculations; Audit Uncovers File Called ‘Twilight Zone’ | 10.18.24 appeared first on Going Concern.

There doesn’t appear to be a press release about this nor is Armanino listed on Further Global’s companies page. Of their “differentiated capital approach,” Further Global says:

Our objective is to be the Capital Partner of Choice to the financial services industry. We seek to be a differentiated form of capital and consider ourselves experts in constructing creative, bespoke solutions within our target universe. In this process we endeavor to take a highly collaborative approach with the management teams behind which we invest, ensuring proper incentive alignment and an open line of communication. We seek to partner with firms in which we can create value by leveraging our extensive network, industry knowledge and operational expertise to assist with business, financial and product strategies on both an organic and inorganic basis.

We target equity investments of $75 to $200 million and have the ability to execute significantly larger transactions through co-investment. While we typically seek to take control positions, we are very comfortable operating in minority positions, given appropriate alignment and governance rights.

Armanino is currently #20 on the INSIDE Public Accounting Top 100 with revenue of $640,448,684.

All we could find about this deal other than the AT article published today is this bare bones September 30th post on MergerLinks: Further Global Capital Management to invest in Armanino. It’s been rumored for a few months now that Armanino was very close to striking a deal with someone for a minority stake so none of this is surprising.

If anyone has more info get in touch.

Armanino takes on minority investment [Accounting Today]

The post Add Armanino to the List of Top 20 Firms in Bed With Private Equity appeared first on Going Concern.

A press release finally showed up this afternoon.

The real story is that EY’s headcount shrunk for the first time since 2010. They were sitting at 393,000 people as of June 30, 2024, down almost 2,500 (2,450, said FT) from June of 2023.

The year sucked so bad they resorted to bragging about how many badges their people earned in fiscal 2024. And the 192 million lives they’ve impacted [citation desperately needed, EY*].

In her first Value Realized letter as CEO, Janet Truncale acknowledged the terrible year they’ve but said she sees “a powerhouse organization in great shape.” She also said “we will continue to invest in EY people” despite how many people at EY US got ripped off on raises, bonuses, and promotions this compensation season. “We have a refreshed people proposition that focuses on the things EY people told us they care about the most: developing skills; being empowered to prioritize their wellbeing; and building an
inclusive and positive culture.” EY people told you that did they?

What even are these snapshots in the annual report? How many countries watched videos?

This is what we’re here for: revenue and growth by service line.

LOL at the small text under Preferred Auditor.

Total revenue of EY global in US currency: $51.2 billion, growth of 3.9% in local currency.

• Assurance: $17.3 billion, growth of 6.3% in local currency (5.8% in USD)
• Consulting: $15.6 billion, growth of 0.1% in local currency (unchanged in USD)
• Strategy and Transactions: $6.2 billion, growth of 2.3% in local currency (2.8% in USD)
• Tax: $12.1 billion, growth of 6.3% in local currency (6.7% in USD)

So single digit growth across the board. Poor consulting, that’s rough.

The EMEIA region (Europe, the Middle East, India, and Africa) saw the most growth at 6.9% while Americas grew by 2.7% and Asia-Pacific didn’t grow at all.

This news puts Deloitte in the lead of the Big 4 revenue race as expected:

• Deloitte: $67.2 billion
• EY: $51.2 billion
• PwC: TBD, next to report
• KPMG: TBD, last to report

Just gonna drop the whole report here so we have it for easy reference later if we need it. It was impossible to find on EY’s site earlier.

EY reports global revenue of US$51.2b for fiscal year 2024 [EY]

*This figure is related to the EY Ripples program. We’re still gonna need a citation.

The post EY and the Terrible, Horrible, No Good, Very Bad Year appeared first on Going Concern.

Under normal circumstances we wouldn’t be terribly interested in news coming out of PwC Netherlands but in this case it’s relevant because the thing they did earned Dutch KPMG the largest PCAOB fine to date when they got caught doing it in 2023. Why’s our audit regulator fining overseas firms when they should be worried about our firms flunking audit inspections? Your guess is as good as mine. Appearances.

The TLDR is PwC Netherlands caught its people cheating. On their wives? No. On their taxes? Also no. The firm discovered that their people were sharing answers to e-learning, a phenomenon that happens at every large accounting firm all the time but one that regulators — particularly our regulator in the US — like to clutch pearls about as if this thing is unconscionable and unique to the firms they catch doing it. On its face, cheating on exams isn’t a great look for a profession that’s supposed to protect the public and holds itself out as a bastion of ethics. But come on.

PwC Canada was sharing answers like crazy up until 2020 and managed to get a completely flawless PCAOB inspection during this same period which you’d think demonstrates that these people know how to do their job. Isn’t that what these trainings are testing? Again…appearances.

Dutch Deloitte and Mazars (now Forvis Mazars but just Mazars back when this happened) have had their own little cheating scandals but what sets them apart from KPMG is that KPMG “submitted – and failed to correct – multiple inaccurate representations to the PCAOB” and claimed the firm had no knowledge of answer sharing by its personnel until it received a July 2022 whistleblower report. Oops. The PCAOB will let abysmal audit quality slide but don’t you lie to them, they hate that. That goes for you too, Europeans.

In 2023, the rampant cheating in their country prompted the Dutch Authority for the Financial Markets (AFM) to ask the big audit firms to investigate themselves to root out any possible answer sharing. Revealed in their 2023/2024 Transparency Report [PDF], PwC says they found just that. What a shocking turn of events. Who could have seen that coming.

Said the firm:

The investigation has found that improper answer sharing has occurred within PwC Netherlands. We know that this behavior stands in contrast to the integrity and trust that must serve as the foundation of our firm, and we are committed to addressing the issue thoroughly.

The scope of PwC’s investigation includes the period from July 2017 to October 2023 and all parts and job levels of the organization. This investigation is ongoing and is expected to be finalized by fiscal 24/25. So next year.

In the meantime, they’ve implemented measures to crack down on this behavior:

While the investigation remains ongoing, we have already implemented a number of measures, such as, the introduction of a Learning Code of Conduct to provide clarity of the firm’s expectations and requirements related to participation in and the delivery of training, improving the way e-learnings are organised by converting some of them into classroom training sessions and the implementation of detective controls to flag possible improper behavior in relation to mandatory e-learnings. We are also taking action to hold colleagues accountable where appropriate, such as corrective conversations, written warnings, financial penalties, loss of position or leaving the firm.

We’ve heard stories about people at EY US getting canned for BSing through e-learning ever since EY got hit with a $100 million fine for cheating in 2022, a fine that was no doubt multiplied by the firm making false submissions to the SEC, so it isn’t too strange to hear that PwC might be axing people for it too. Or maybe they’re just saying that. Let’s be real, the high performers are getting “corrective conversations” at most. Assuming PwC didn’t lie to regulators about it they should be in the clear on a hefty fine.

PwC Netherlands said they are “engaging in a root cause analysis to identify and interpret the underlying causes of improper answer sharing.” Maybe, and I’m just spitballing here, it has to do with the intense pressure of Big 4 grind culture and a lack of fucks given on the part of overworked staff forced to sit through checkbox trainings? “The results of this analysis will be finalized after completion of the investigation and used to strengthen the measures already taken and introduce any new measures as appropriate,” said PwC. Can’t wait.

“Few things erode trust like impaired ethics,” said PCAOB Chair Erica Y. Williams in April 2024 when the PCAOB announced fines against Deloittes Indonesia and Philippines for cheating. “To protect investors, the PCAOB will continue to address serious quality control deficiencies at PCAOB-registered firms around the world.”

“Yeah, we know. Do you really have nothing better to do?” I asked in the write-up of those fines.

Since PwC came clean about the situation we shouldn’t expect them to earn a big fine for this. A slap on the wrist at most if even that.

Related I guess:

The post PwC Joins Deloitte, KPMG, and Mazars in the Cheater Hall of Fame appeared first on Going Concern.

Announced by the AICPA yesterday, the current president and CEO of Allinial Global — described in the press release as “an association of independent accounting and advisory firms with $6 billion in collective revenue and 268 member firms worldwide” — will be taking over for Barry Melancon in January. Allinial firms include BPM, Cherry Bekaert, Eisner Advisory Group, Weaver, and Wipfli.

Simon Bittlestone, FCMA, CGMA, CIMA president and chair of the Association, said: “We are delighted to announce Mark as our new CEO for the Association. The appointment follows an open and extensive global search that attracted a strong pool of candidates from around the world. Mark is a dynamic, values-led leader with extensive experience and knowledge of our profession. The board looks forward to working with him in leading our members, candidates, and the profession into the 2030s and beyond.” Simon also took the opportunity to thank Barry Melancon “for his leadership of AICPA & CIMA and lifelong commitment to advancing the accounting and finance profession – a remarkable 30 years of dedication.”

Mark Koziel said: “I am excited and honored to be appointed CEO of the world’s largest accounting membership body. I look forward to playing a key role in leading the organization and the profession to new heights. The profession is well positioned to expand and continue to evolve the value it brings serving the public interest and addressing the challenges faced by economies, business, and society.

Literally the same as the last guy.

“I cannot wait to start working closely with members, candidates, volunteers, and staff to do just that and drive our great profession forward,” added Koziel.

Retiring CEO Barry Melancon said: “Serving the profession over the last 30 years has been a great honor, and I have been fortunate to have played a part in its transformation. I am thrilled to see Mark appointed to the role, knowing his passion and vision for the profession and AICPA & CIMA. Mark will do a fantastic job.”

We’ll do a deeper dive on this dude shortly.

The post Drum Roll Please! The Next CEO of the AICPA Is… appeared first on Going Concern.

Apparently they were planning to do a little maintenance on the Tax Pro Account systems from October 13-15. No biggie. This is fine. It’s just like any other weekend. A holiday weekend no less!

but why?!? pic.twitter.com/IpyTDXaAdc

— Andrea Carr CPA (@andreacpa0) October 12, 2024

The notification no tax pro wants to see on the days leading up to 10/15:

Good news though! Thanks to a large number of exhausted tax pros taking time out of their busy emotional breakdowns to complain, the IRS decided not to torture them further with scheduled maintenance after all.

The #IRS Tax Pro Account maintenance this weekend has been postponed. The system will remain open. We appreciate tax pros and especially the long hours they’re putting in to serve taxpayers ahead of the 10/15 deadline. Thank you to #TaxTwitter pros for flagging this!

— IRSnews (@IRSnews) October 12, 2024

Happy 10/15, everyone.

Earlier:

The post The IRS Decided to Troll Tax Pros For 10/15 appeared first on Going Concern.

FT:

On a call with staff, EY-Parthenon bosses blamed a disappointing market for mergers and acquisitions and private equity activity, meaning advisory revenue growth has been slower than expected since the start of the firm’s fiscal year in July, according to people familiar with the discussion.

EY said the decision to delay start dates for a second year running was made “after careful consideration of the current M&A environment and our business needs” and that it would “ensure that our new joiners have the quality and breadth of assignments to ensure a successful start and strong professional trajectory”.

The firm will provide stipends ranging from $12,000 to $35,000 to those affected, depending on their original start date and whether they are joining with an undergraduate degree or an MBA, according to a person familiar with the figures.

Just last week, on the same day PwC began a big batch of layoffs, it was reported EY partners would be getting about two percent sliced off of their yearly compensation, money that will go back into the business to manage cash flow.

When EY compensation numbers came out in August, several people reported no raise, no bonus, and/or no promotion. To quote one manager who received a 2.4% salary increase and 0.88% bonus: “Balls in my throat.”

EY is certainly not the only Big 4 firm dealing with a significant slowdown in deals activity but it is the only Big 4 firm that burned a $500 million hole in its pocket to explore a split of audit and consulting practices that never materialized. After Project Everest crashed and burned, the firm went on to lay off 3,000 people immediately after (they claimed this axing of 5% of the workforce was totally unrelated to Everest) and forced out an unknown number of partners just before Christmas.

We expected EY’s FY24 revenue announcement to come out some time in September so obviously that’s late. Whether or not it’s an intentional delay is anyone’s guess.

EY delays start dates for graduates because of slowdown in deals [FT]

The post EY Tells 200 Grads Expecting to Start Soon to Hit the Bench Until Next Year appeared first on Going Concern.

An ‘everygirl’ tells the tale of being pressured to choose a major, landing on accounting, and regretting the decision in ‘I Was Dedicated to My 5-Year Plan—and Then It Blew Up in My Face‘:

It was the fall semester of my sophomore year of college. I had a mandatory meeting with my academic advisor to discuss my next semester’s courses. I didn’t know it then, but a decision I made that day would set my five-year plan in motion.

My rationale for choosing the accounting route ultimately came down to the degree being more specialized. I could utilize my accounting knowledge to work in business, but if I had a business degree, it would be harder to land a job in accounting.

And so she trudged forward at the urging of her school’s accounting program…

While rigorous and challenging, I loved the absoluteness of this plan. If I did all of these things and checked all of these boxes, I would be happy and successful. No ifs, ands, or buts about it. I knew what I had to do, I set off on the path, and I never looked back. Graduate undergrad. Check. Land an internship at a prestigious accounting firm. Check. Start graduate school with a full-time job offer in hand. Check. Everything was going according to plan—until it wasn’t.

Fast forward to her sitting for the CPA exam 10 times and failing 9 while still in grad school…

I had a glaring red flag in front of me that I was in the wrong profession, and yet, I clung to my career in accounting because it was a part of the plan. I clung to it even when I began to dislike the work. I clung to it even when I cried in the bathroom at the office. I clung to it even when I had to pop a melatonin on my drive home at midnight during the busy season to ensure I’d fall asleep in time to wake up and do it all again. I held onto my accounting career until I was white in the knuckles because I had invested too much energy, time, and money into the profession. I was so unhappy, but it was unfathomable for me to do anything else.

A church in Texas is accused of fraud. Bring in the CPAs!

Writes Religion Unplugged:

Responding to a lawsuit accusing Dallas-based Gateway Church of financial fraud, Gateway Elder Tra Willbanks assured congregants over the weekend that the church has “independently audited financial statements since 2005.”

He added, “These audits have demonstrated that our finances are managed consistent with best practices, and we have never had any wrongdoing revealed through these audits.”

The firm conducting the audits is Capin Crouse, a nationally recognized auditing firm for nonprofit organizations, Willbanks said.

However, a “seasoned CPA,” mentioned as a whistleblower in the lawsuit filed Friday against Gateway, told The Roys Report (TRR) that Gateway did not conduct any audits during his time on staff,  from 2011-2014. Instead, Gateway conducted financial reviews, which “are not designed to detect errors or fraud.”

Local news is on it.

And in other fraud news, a CFO behaving badly:

The ex-chief financial officer at convicted former attorney Tom Girardi’s law firm pleaded guilty Friday to helping the once-prominent litigator embezzle millions in settlement funds from clients.

Christopher Kamon, 51, entered his plea to two counts of wire fraud in Los Angeles federal court.

Sentencing was scheduled for Jan. 31, at which time Kamon faces up to 40 years behind bars.

Kamon, the former head accountant at the now-defunct Girardi Keese firm, admitted his role in the scheme and acknowledged embezzling millions of dollars from the firm’s accounts for his own use. He agreed to forfeit $3.1 million as part of the deal.

Apparently, and this is something I didn’t know until now because I like to believe I’m above watching trashy Bravo shows even though I am so obviously not, Tom Girardi is one of the Real Housewives husbands. This is from NBC News in August:

Former “Real Housewives of Beverly Hills” star Tom Girardi, the disbarred attorney, was found guilty Tuesday in the embezzlement of millions of dollars from his former clients.

A federal jury in Los Angeles convicted Girardi, the 85-year-old estranged husband of “Real Housewives” star Erika Jayne, on four wire fraud charges. The charges alleged he stole money from his clients over a decade, including $3 million from relatives of the victims of the 2018 Lion Air crash in the Java Sea, which killed 189 people.

He pleaded not guilty last year. His sentencing is scheduled for Dec. 6.

Tyler Hatcher, special agent in charge of the IRS criminal investigation unit in Los Angeles, said Girardi “exploited his clients’ misfortunes on a grand scale.”

PwC Netherlands should be getting a call from the PCAOB any day now, they’ve uncovered — clutch those pearls, it’s bad — EXAM FRAUD. NL Times reports:

Exam fraud has been committed at PwC in the Netherlands, the accounting and consultancy firm reported this in its annual report for 2023 and 2024. Earlier, fraud with tests was discovered at industry peers Deloitte and KPMG, among others.

The exam fraud consisted of accountants sharing answers to mandatory tests, which is not allowed. “We know that this behavior is contrary to the integrity and trust that must form the basis of our business, and we are determined to tackle this problem thoroughly,” PwC wrote in the annual report.

According to PwC, the extent of the fraud cannot yet be determined, as the investigation is still ongoing. The Netherlands Authority for the Financial Markets (AFM) asked all major accounting firms to conduct such an investigation. The study at PwC, which covers July 2017 to October 2023, is expected to be completed in the next financial year. That financial year runs until the end of June 2025.

KPMG Netherlands received the biggest PCAOB fine to date back in April for their own exam cheating. Forvis Mazars caught its people cheating too. And Deloitte. Those darn Dutch and their answer sharing (that everyone else around the world does too)!

Speaking of Forvis…Forvis Mazars launched a hackathon in Nigeria. This publication called them “Farvis Marvars” and I can’t stop laughing.

Farvis Marvars, an audit, tax, and consulting firm, has launched its first hackathon to enhance cybersecurity solutions.

The maiden edition tagged: ‘’Innovate with Forvis Mazars Hackathon’’ brings together innovative young minds aged 18-35 from diverse backgrounds to collaborate and develop cutting-edge solutions for pressing cybersecurity challenges.

According to the firm, participants will work on innovative ideas across AI in audit, data analytics, data sciences, data privacy, and compliance over a six-week duration.

The firm noted that the hackathon is a significant step towards empowering the next generation of cybersecurity professionals and driving impactful change in the industry.

NJBIZ seeks to answer the question “How can CPA firms reverse decade-long slide in new membership?“

They asked the wrong people.

A Big Four professional said investing in employees is one way to replenish the pipeline.

“KPMG is able to attract and develop talent to grow with quality top-of-mind,” said KPMG US Short Hills Office Managing Partner Jennifer Shimek. “We attract and retain accounting professionals through collaborations with universities, offering the Master of Accounting with Data and Analytics Program and Audit Intern Bootcamp. We invest in learning and development through on-demand learning on our smart audit platform and collaboration at KPMG Lakehouse. We also help people achieve the CPA through our CPA Kickstart program, which provides people from all backgrounds the opportunity to get paid while studying for the exam with enhanced resources.”

She noted that KPMG is also leveraging artificial intelligence as a complement to flesh-and-blood activity. “We don’t view AI as a substitute for auditors,” Shimek explained. “Audits will always require human judgment. However, AI helps address the CPA shortage by attracting more people to the profession. AI reduces manual work, creating more time for higher-value work that people enjoy. It is also creating new demand from companies, helping us to expand into new areas like cybersecurity and AI governance. This shift not only attracts new talent, but also reinvigorates the sense of purpose in auditing, ultimately strengthening our workforce.”

Anyone else creeped out by the phrase “a complement to flesh-and-blood activity”? Maybe I’ve just been playing too much Silent Hill 2 this past week. You see it too? For me, it’s always like this.

RSM picks up Deloitte’s sloppy seconds, a failing British telecom:

TalkTalk’s auditor has quit as the debt-laden broadband firm faces a fresh squeeze on its finances.

Deloitte, which has served as TalkTalk’s auditor since August 2002, has resigned from its role, according to company filings.

A spokesman for TalkTalk said the resignation was a result of a planned rotation following a break-up of the group last year. RSM has been appointed as Deloitte’s replacement.

It comes after billionaire founder Sir Charles Dunstone and other shareholders were recently forced to pump another £235m into the struggling broadband firm to stave off collapse.

And PwC pays for some environmental mess:

PwC is thought to have paid £132 million to British American Tobacco for its role in a “deeply flawed” audit of one of the tobacco giant’s subsidiaries, which was accused of dumping toxic chemicals into two rivers in the US.

The UK maker of Lucky Strike and Dunhill cigarettes had been seeking more than £600 million in damages from the Big Four giant for a “negligent” audit of a historic division of BAT, Windward Prospects, a paper maker. The tobacco giant claimed that the flawed audit caused Windward to breach its commitment to cover environmental clean-up costs.

Windward, which is now in administration, was accused of dumping chemicals used in making carbonless paper for duplicating receipts and invoices, into rivers in Wisconsin and Michigan.

The Times got this information from PwC UK’s annual report which showed the firm set aside £181 million for legal claims and regulatory fines, £162 million of which was paid out in cash. That’s much higher than last year’s fine pool of £33 million and “significantly higher” than similar funds at the other three Big 4 firms.

OK, we’re done here. Shoot me an email or text if you happen to see an article you think we should discuss, have a tip to share, or just want to talk about James Sunderland’s descent into madness (alternatively, why Pyramid Head is a sympathetic figure at his core).

Have a great week, everyone!

The post Monday Morning Accounting News Brief: No One Plans to Hate Accounting; PwC Was Cheating!? | 10.14.24 appeared first on Going Concern.

CohnReznick has $150 million of EBITDA, they said. The firm is currently sitting at #16 on the INSIDE Public Accounting Top 100 with $1,052,365,413 in revenue.

In June, Financial Times ran a teaser story that named three firms very close to inking private equity transactions — PKF O’Connor Davies, Carr, Riggs & Ingram, and Aprio. Aprio’s private equity deal was leaked ahead of an announcement shortly thereafter, CRI hasn’t made a deal yet as far as we know but is exploring options, and who cares about PKF O’Connor Davies.

A CohnReznick deal would mean six of the country’s top 20 accounting firms have taken private equity investment. In descending order by revenue size those firms are BDO (6), Grant Thornton (7), Baker Tilly (10), EisnerAmper (17), and Citrin Cooperman (19).

If anyone in the know feels like talking, get in touch via email or text. Tips are always anonymous.

CohnReznick said to review PE investment interest by early 2025 [PE Hub]

The post CohnReznick is Allegedly Exploring a Private Equity Deal appeared first on Going Concern.

News

AICPA moves to amend financial statement standard [CFO Dive]
Well this is a BFD!
As it’s become increasingly popular for external CPAs and even CFOs to help run a company’s financial operations, the American Institute of CPAs is looking to clarify the standard for how financial statements prepared as part of an external client advisory services engagement are treated. The move is designed to address the uncertainty, confusion and diversity of practice with respect to the subject, said Mike Glynn, associate director of audit and attest standards and staff liaison for the AICPA’s Accounting & Review Services Committee.

Firm Claims Financial Misconduct by Central Basin GM, Then Admits the Numbers ‘Could Be Incorrect’ [Los Cerritos Community News]
Los Cerritos Community News out here doing some hard-hitting journalism. That is not sarcasm.
A few weeks ago, Los Cerritos Community News exclusively reported that Central Basin Municipal Water District’s (CB) cash on hand had dropped $3 million in only seven months after attorney Victor Ponto, who was appointed in February, took over for Dr. Alex Rojas after the ruling majority on the CB Board illegally placed Rojas on leave. Two weeks later, LCCN exclusively reported that some CB Directors, after they appointed Ponto, immediately began taking thousands more in payments to attend dubious “meetings.” This past week, a report on CB was released by the firm Carr, Riggs & Ingram (CRI) alleging “lax oversight” of CB finances during the tenure of General Manager Dr. Alex Rojas, whom Ponto took over for in February. Interestingly, after ignoring LCCN’s stories that found millions in potential fraud and waste, the Whittier Daily News was at-the-ready to publish an article about the CRI report, which claimed to find $200,000. The report, which, according to sources, cost CB an eye-opening $400,000, concluded that $123,000 was misspent, including more than $75,000 in “inflated salary” extra pay and benefits that went to Rojas.

Remaining Downtown: While others move on, an accounting firm is expanding in the Golden Triangle [Pittsburgh Post-Gazette]
At a time when many firms are downsizing their office space, Louis Plung & Company is going against the flow. The accounting and advisory firm is moving its Downtown headquarters to the 20 Stanwix — an office building at Stanwix Street and Fort Pitt Boulevard overlooking the Monongahela River — where it has signed a lease for 18,041 square feet of space. The move will not only allow Louis Plung & Company to expand its team, but will keep the firm Downtown at a time when some other businesses have departed because of concerns about crime, safety, and other issues. It was “extremely important for us to remain Downtown. We’ve been a part of this city for over 100 years and we want to remain an integral part of Pittsburgh’s vibrant business community and help shape the city’s future,” Managing Partner Lou Plung said in a statement.

CLA Wealth Advisors Named to Barron’s 2024 Top 100 RIA Firms List [CLA]
CLA Wealth Advisors (CliftonLarsonAllen Wealth Advisors LLC), continued its upward climb in the annual Barron’s list of Top 100 RIA Firms. Part of CLA (CliftonLarsonAllen LLP), one of the country’s leading professional services firms, CLA Wealth Advisors ranked 45th, rising five places since last year’s list and marking the seventh year the firm has been recognized by the prestigious publication.

Talent

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Here are this week’s top remote accounting candidates for your browsing pleasure.

Crypto

Former Crypto CEO Posts Hilarious LinkedIn Update Right Before Going to Prison [Futurism]
The LinkedIn grind never stops — not even for prison. Ryan Salame, the former co-CEO of the now-defunct crypto exchange FTX, was sentenced in May to seven and a half years in federal prison after pleading guilty to criminal charges related to conspiracy to operate an unlicensed money transmitting business and unlawful campaign donations. In addition to serving time in prison, Salame was ordered to forfeit $1.5 billion.

Tether looks to revamp US image as it celebrates 10 years [FOX Business]
Tether’s reserves have long been a source of controversy, with the broader crypto industry criticizing the company for its previous lack of transparency and auditing. As a stablecoin, Tether’s tokens are pegged to the U.S. dollar, and the company asserts that all $119 billion worth of USDT tokens in circulation are fully backed one-to-one by dollar reserves. However, since Tether is not based in the U.S. and conducts most of its business offshore, it has never undergone a full audit by a U.S. accounting firm, fueling skepticism about the true state of its reserves. As part of its settlement with the New York attorney general, Tether agreed to submit quarterly reports on its reserves for two years. The firm now uses the Italian arm of global auditor BDO to produce quarterly attestations of its stablecoin reserves. As of Aug. 1, BDO reported that Tether had $118.4 billion in reserves and $5.3 billion in excess reserves. Tether also now publishes daily reports on its website that detail the amount of Tether in circulation and the amount of USD reserves held by the company. However, Tether has never had a full audit done, even by BDO, as its quarterly attestations do not qualify as systematic examinations of the whole company and its financial statements.

Audit

Big Four audit firms conclude transition period of operational separation [Financial Reporting Council (UK)]
The Financial Reporting Council (FRC) has today announced the four largest audit firms (Deloitte, EY, KPMG, PwC), have concluded the transition period of operational separation. Throughout the three-year transitional period, all four firms have made significant improvements to their governance to prioritise the delivery of audit quality. This includes the creation of independent audit boards chaired by Audit Non-Executives, improved transparency on financial transactions between the audit and non-audit business, and greater accountability at firm level for the delivery of operational separation outcomes. The firms have also developed audit specific cultures, with behaviours focussed on challenge, openness and professional scepticism. All four firms have met the 2024 deadline set by the FRC to implement the principles of operational separation. As set out in the Operational Separation Principles, the FRC will publish an assessment of the firms’ compliance each year, following the transition period.

Salaries

This accountant makes $76,000 a year. How does she spend it? [Toronto Life]
Rent: $1,950 a month. “I used to live with a roommate and paid $1,244. But the privacy is worth the extra rent.” Takeout: $0. “I never get takeout, and I haven’t bought a work lunch in two years. I always pack a lunch and plan my meals.”

Practice Management

Case studies: How I bought/sold my accounting business [Accounting Times (Australia)]
Kev Ryan says patience with, and trust in, the buying and selling process will overcome the many challenges of making a good match. And while there is a proper process to follow, it’s vital to recognise that there is no such thing as a one-size-fits-all solution. “Every transaction has its own peculiarities, especially mergers,” Ryan says. “The individual requirements of each party must be respected. You can’t template or rush transaction advisory.” Just as accountants regularly advise their clients on process, it’s important that they also seek expert advice on what’s required in selling or buying a firm. “We’re constantly talking to our clients about following the proper purchase process of undertaking thorough due diligence,” Ballinger says. “So, it was good for us to do that ourselves, to get that experience and find out exactly how it works.”

Lawmakers press Deloitte on ‘fraud’ in application to $5B Texas fund for gas-fired power plants [Houston Chronicle]
Texas lawmakers grilled executives from Deloitte, the consulting firm contracted to manage a $5 billion taxpayer-funded program mainly intended to kickstart construction of natural gas power plants, after the organization advanced a potentially fraudulent loan application. Allegations first arose last month that a little-known company, Aegle Power, sought loans for its proposed natural gas power plant by listing another big-name company as a sponsor without permission. Additional scrutiny revealed Aegle Power CEO Kathleen Smith had previously been convicted in an “embezzlement scheme” related to the development of a different power plant. In addition to seeking to slash the consulting firm’s up to $107 million contract, lawmakers heard accusations Tuesday that Aegle Power falsified yet another aspect of its application to the state.

Technology

Deloitte: Why Only a Quarter of Cybersecurity Professionals are Women [TechRepublic]
As of 2023, women make up only 20% and 25% of the cybersecurity workforce, according to training body ISC2. New research from Deloitte explores the reasons behind this gender gap, despite the high demand for skilled professionals in the industry. Half of young working women interested in cybersecurity feel they lack sufficient knowledge of the field to pursue a career in it. Furthermore, 55% of all women surveyed believe the industry could prove intimidating, and 47% are concerned they wouldn’t be taken seriously. The results, published in “POV Reimagined: Women in Cybersecurity” in October, are based on a survey of 8,000 non-cyber professionals from around the world conducted by Deloitte Global and media company The Female Quotient.

More awareness needed to transform workforce, says EY consultant [The Edge Malaysia]
More Malaysians need to be aware that the advent of artificial intelligence (AI), digital transformation and the green economy will make some jobs irrelevant in the near future, according to a consultant from Ernst & Young (EY) Malaysia. If not addressed properly, EY Malaysia consulting managing partner Chow Sang Hoe said the Malaysian workforce risks being left far behind in the evolving global economic landscape. He said this in conjunction with the upcoming release of the future skills frameworks by the Ministry of Human Resources: a report to prepare Malaysia’s workforce for the future needs of the industry. “The study is done. We got the data. But now we need to get Malaysians [to buy in] and not be complacent,” Chow told The Edge in an interview. “I’m not trying to make people panic, but we need to increase the awareness that it’s time to do something.”

Tax firms want new tech but need infrastructure to handle it, new report shows [Thomson Reuters]
As technology has become more commonplace in the business world, the need to become tech-savvy has taken increased importance among tax & accounting firms. Leadership at all sizes of firms has pinpointed technology as a significant or central part of the overall firm strategy, and next-generation technologies such as generative artificial intelligence (GenAI) are firmly on firms’ radars. At the same time, however, leadership focus on GenAI has not translated into practical applications, according to a new report from the Thomson Reuters Institute. The 2024 Tax Firm Technology Report has found many tax & accounting firms still have a way to go in making sure technology actually works in the best interest of the firm. Even if firms are increasingly purchasing software solutions, few firms have the personnel, workflows, and leadership strategies to make sure they are getting the most out of their technology usage, the report shows. Overall, those firm leaders surveyed said they feel they are relatively mature in their technology usage compared to peers.

Exclusive: New Zealand accounting firm confirms Sarcoma ransomware attack [Cyberdaily.au]
The Feilding-based New Zealand accounting firm Advanced Accounting has confirmed it was the victim of a recent ransomware attack. Ransomware newcomer Sarcoma listed the company on its darknet leak site on 10 October, claiming to have stolen 115 gigabytes of data. No ransom demand has been listed by Sarcoma; however, the gang is threatening to publish the data within 13 days. Sarcoma has already published a raft of documents as evidence of the hack, including scans of passports and driver’s licences, as well as financial documents. Advanced Accounting has said it is aware of the incident, and a spokesperson told Cyber Daily that “we are mortified this has happened and doing our very best to get everything resolved”.

The post Friday Footnotes: AICPA Gets Around to Addressing Outsourcing; Prison-Bound CEO Updates His LinkedIn Hilariously; Big 4 Split | 10.11.24 appeared first on Going Concern.

RSM US and RSM UK announced the two entities “intend to establish a partner-owned multinational organization dedicated to delivering quality, globally integrated services for the middle market.” In other words, they’re merging. And of that they said:

This merger would significantly expand the multinational platform created by the U.S. and Canada with the launch of RSM Canada in 2017 to meet the growing needs of global middle market businesses and continue RSM UK’s expansion following its 2023 merger with RSM Ireland.

The integration of the two largest firms in the RSM International Network would advance RSM’s global 2030 strategy by creating a leading platform for assurance, tax and consulting services worldwide.

Following the infographic is this in big letters:

Client service from 4 countries supported by integrated teams in India and El Salvador

Ohhhh, we get it.

In July, RSM US announced plans to more than double the amount of staff in India from 2,000 to 5,000. Last we checked, RSM US had around 17,000 employees including the offshore ones. “The proposed merger will enable seamless service delivery across the U.S., the UK, Canada and Ireland,” they said.

And now for the quotes. “Our clients have long desired to be served by a financially integrated transatlantic organization. This merger will create a platform to more effectively serve client needs with quality services and more seamless access to our resources,” said Brian Becker, Managing Partner and CEO of RSM US. “We are doubling down on our future as a dynamic, partner-owned platform, at a time when the industry is undergoing transformation. We are well capitalized to continue investing in our growth and the advancement of our 2030 global strategy. We have a deep and long-standing relationship with our UK colleagues, and we look forward to joining forces to drive value for our clients, owners, employees and the entire RSM International network.”

Becker told Financial Times earlier this year that RSM had no plans to court private equity investment, hence the “partner-owned” comment above.

“RSM UK has seen strong growth in revenue and profits as we’ve repositioned the firm over the last four years,” said RSM UK CEO Rob Donaldson in his sanitized and PR-polished comment. “Bringing our UK and Irish firms together with our U.S. and Canadian colleagues is the next logical step on our journey. We already have strong bonds with our transatlantic colleagues and work together with a common aim, to be leading advisors to the middle market.”

“We’ve decided to come together to form a unique partnership that goes further to service the needs of our clients as they expand globally, and to create terrific opportunities for our own talent,” he added. “Now is the time to accelerate our ambitions by drawing on each other’s considerable strengths to become the middle market advisor of choice, globally.”

A tipster says to us Rob Donaldson told partners at a conference earlier this year that the firm had no plans to do a transaction so this news comes as a bit of a shock. We’ll dig more into that, sounds like there’s some good drama at the center of that particular Tootsie Pop.

RSM US and RSM UK pursue transatlantic merger to strengthen client offering [RSM]

The post RSM to Merge With RSM appeared first on Going Concern.

Reports FT:

Democratic senators Elizabeth Warren and Sheldon Whitehouse said deficiency rates that have exceeded 40 per cent for the past two years call into question whether the Public Company Accounting Oversight Board is properly holding the industry to account.

In a letter to the PCAOB seen by the Financial Times, the senators zeroed in on BDO, the sixth-largest accounting firm in the US, where almost all audits examined by inspectors last year were found to have flaws. They asked whether “repeat offenders” are deterred by potential fines that they said are typically “a drop in the bucket” compared with firm revenues.

“The PCAOB must do better,” Warren and Whitehouse wrote. Either the audit standards written by the board were inadequate, they wrote, “or the PCAOB is failing to establish accountability for firms that do not meet them”.

Oh boy. Look, lady, the PCAOB has been very busy fining audit firms halfway across the world for not filing a timely Form 3, ain’t nobody got time to hand down some consequences to sloppy firms.

In their defense, the PCAOB has been handing down record fines in recent years. Obviously this tactic isn’t working because the firms know they can’t/won’t do shit of real consequence at the end of the day. Their largest fine to date was $25 million against KPMG Netherlands because auditors were sharing answers on BS internal training and the firm fibbed when they told the PCAOB they didn’t know it was happening (spoiler: it happens everywhere). “The PCAOB will not tolerate cheating nor any other unethical behavior, period,” said PCAOB Chair Erica Y. Williams when that fine was handed down earlier this year. “Impaired ethics threaten the investor confidence our system relies on, and the PCAOB will take action to hold firms accountable when they fail to enforce a culture of honesty and integrity.” But screwing up 86% of your job is fine, whatever. Just have Chair Williams write another scathing op-ed for the Wall Street Journal and say for the millionth time that firms must do better.

A question that gets asked any time a new PCAOB fine (or verbal tongue-lashing) happens is this: Does it matter? Did financial statements need to be restated or opinions changed as a result of the misbehavior a firm is fined for? No? Then who cares.

We all know the PCAOB is the TSA of capital markets: security theater. Evidently Senators Warren and Whitehouse are just now figuring that out too. I’ve got a free idea for them. Bully the PCAOB into forcing firms to report the exact percentage of work being performed by offshore staff. That should lead you in the right direction.

Elizabeth Warren criticises accounting watchdog over BDO audit failures [Financial Times]

The post Senators Yell at the PCAOB Because BDO’s Auditing Sucks appeared first on Going Concern.

“Trump has just so thoroughly failed to deliver on his economic populism (excepting a disjointed China policy),” Vance wrote in February 2020.

“I think Trump will probably lose,” he wrote in a message in June 2020, a few months before ballots were cast in an election that Vance would later claim, falsely and repeatedly, was stolen by the Democrats.

It’s no secret JD Vance used to be a Trump critic. In 2022, Vance’s former roommate Josh McLaurin (now a Georgia state senator) shared Facebook DMs from Vance he received in 2016 that said, among other things, “I go back and forth between thinking Trump is a cynical asshole like Nixon who wouldn’t be that bad (and might even prove useful) or that he’s America’s Hitler.”

Although WaPo chose not to name the recipient of the 2020 DMs leaked to them due to the potential for retaliation, Breitbart was more than happy to do so in the spirit of such. In “Exclusive — Deloitte Consultant Behind Ethically Questionable Leak of JD Vance Communications to Washington Post,” Breitbart reveals the leaker to be Deloitte principal Kevin Gallagher:

But what the Post did not do is tell its audience who Vance was communicating with in these messages, or provide the full context of the conversation, since it only reported part of one side of it. The Post argued it granted the source who provided these messages anonymity “because of concerns about retaliation,” but Breitbart News can reveal the person’s identity here for the first time as a well-connected Deloitte consultant.

Oh no, here it comes.

The Deloitte consultant, whose identity the Washington Post’s Peter Jamison hid from the newspaper’s readers, is named Kevin Gallagher. Deloitte’s website lists Gallagher as a “principal” with the firm, based in Connecticut. Breitbart News has seen a screenshot of messages that Vance sent to Gallagher—the other side of the conversation is not available, because Gallagher had deleted his account, thereby deleting the messages—confirming that Gallagher is in fact the recipient of these.

That same day, Donald Trump Jr. accused Gallagher — who has since gone into internet hiding — of interfering in the election and asked if it’s time for the GOP to “end Deloitte’s taxpayer funded gravy train.”

An executive at @Deloitte named Kevin Gallagher decided to interfere in the election & leak private convos with JD Vance to help Kamala Harris. Deloitte also gets $2B in govt contracts. Maybe it's time for the GOP to end Deloitte's taxpayer funded gravy train?

CC @speakerjohnson pic.twitter.com/gAOs1TBt86

— Donald Trump Jr. (@DonaldJTrumpJr) September 27, 2024

Conservative newsletter Amuse echoed this sentiment in a long-ass tweet:

The sheer audacity of Gallagher’s interference would be appalling on its own, but it is especially outrageous when considering his position at Deloitte—a firm that has raked in billions in government contracts. Over $2 billion, in fact, has flowed into Deloitte’s coffers from taxpayer-funded projects. Why, then, are we allowing such an entity, whose executives play politics for personal gain, to enjoy the spoils of government largesse? Deloitte has been cashing checks courtesy of American taxpayers while its leadership engages in partisan warfare. The GOP must recognize this glaring conflict and take swift action to curtail Deloitte’s access to federal contracts.

Not to ackshually here but ackshually, Deloitte plays both sides because what they value above all else is revenue. Here’s some data from government transparency group OpenSecrets. Remember they’re tracking individual donations among these.

LOL at the 77.45% to Republicans in 2002, the year Sarbanes-Oxley rose like a phoenix from the ashes of Arthur Andersen’s literal tons of shredded documents. Surely unrelated.

Here’s a breakdown by affiliate for the 2024 election cycle (a.k.a. the nightmare in which we are currently residing):

Lastly, recipient data from the 2024 election cycle. What this says is that individuals associated with Deloitte are throwing more money at Kamala Harris than Donald Trump. What it doesn’t say is that Deloitte endorses Kamala Harris. They’re gonna quietly endorse whoever is going to allow them to make the most money, which is probably why Kevin Gallagher is not getting invited to happy hour any time soon because this kind of heat is bad for business.

Wrote WaPo’s Peter Jamison in a follow-up article:

On Sept. 27, Donald Trump Jr. exposed the employee’s name and photograph to millions of people on social media, writing, “Maybe it’s time for the GOP to end Deloitte’s taxpayer funded gravy train?” Others — including Vance’s chief spokesman and a Republican senator — circulated Trump Jr.’s comments, and the conservative website Breitbart published a story naming the man and highlighting his job.

Deloitte receives about $3 billion annually from federal agencies including the Department of Health and Human Services and Department of Defense.

Ethics experts said the episode is a potentially ominous preview of how a second Trump administration might use the enormous power the federal government wields over private industry to punish political acts by individual workers. Although federal contracting laws prohibit cutting off a business because of its workers’ private political views, such threats could have a chilling effect, they said.

Added Jamison:

“I’ve never seen anything like this,” said Kedric Payne, senior director of ethics at the nonpartisan Campaign Legal Center and former deputy chief counsel in the Office of Congressional Ethics, adding that the goal was probably to pressure Deloitte into firing the worker. “You can’t imagine that if one employee out of thousands made a statement that offended an official, that then the government contracts would be in jeopardy.”

Yeah, they’re probably not. The #boycottdeloitte hashtag is pretty quiet all things considered.

“This individual shared private personal messages on his own volition without the knowledge of Deloitte, which is a non-partisan firm,” Deloitte told WaPo in a statement. “Deloitte is deeply committed to supporting our government and commercial clients and we have a long track record of doing so across parties and administrations.”

Comments are open, don’t make us regret it. Behave like the educated adult professionals you are please and thank you.

The post Here’s Why Trump Fans Are Mad at Deloitte appeared first on Going Concern.

There are only a handful of closures listed as of today (October 9), two of which are in North Carolina due to Helene — testing center 1610 in Asheville and 1747 in Wilmington — and one at the NYC MegaCenter on Broadway that’s been closed since June after a burst pipe caused flooding and electrical damage at that location.

Two Tampa locations are closed — 0657 and 5006 — along with one in Fort Myers (5022), one in Longwood (5836), one in Sarasota (0606), one in Boca Raton (5134), and one in West Palm Beach (0603). These appear to be preemptive closures, more could certainly be added as the hurricane rolls through the state [Ed. note: see below for an update].

If your testing center is closed due to extreme weather, Prometric’s Outbound Team will reach out and you’ll be able to reschedule after 24 hours as long as you still have time remaining on your NTS. Contact NASBA with any concerns and they’ll take care of you.

Please be safe and don’t do anything stupid. The exam will still be there after Milton makes his way out to sea.

Update: A few more testing centers in Florida have been added to the list as of October 10.

• 0629 in Gainesville
• 0080 in Longwood
• 0610 and 0612 in Ft. Lauderdale

See the most current list on the Prometric closures page here.

The post PSA to Florida CPA Candidates: Milton Might Close Your Testing Center (UPDATE) appeared first on Going Concern.

On October 7, Dohman, Akerlund & Eddy, LLC (or DA&E as we’ll refer to them for the remainder of this article) of Aurora, Nebraska sent out letters to 82,207 people whose data — including name, address, date of birth, Social Security number, medical treatment/diagnosis information, dates of service, health insurance provider name, health insurance claim information, and/or treatment cost — was accessed through a breach of their network in February of this year. As is required by the law, they also filed a breach notification with the attorney general of Maine as 19 of those 82,207 people are residents of the state.

We wrote about a similar breach just a week ago (see: A Firm With 55 People Finds Itself at the Center of a Data Breach Affecting 127,431) and wondered out loud at that time how a tiny little accounting firm with 55 people working there would find itself in possession of the medical/treatment information of 127,000 people. In the case of DA&E, we don’t have to wonder. They spell it out in a press release put out today.

It said:

Dohman, Akerlund & Eddy, LLC (“DA&E”) announces a data incident that impacted some protected health information stored on its network. DA&E provided auditing services to some Aurora area hospitals.

As far as the breach itself, DA&E detected suspicious activity on its network on February 28, 2024. They brought in third-party specialists to conduct an investigation and determined “an unknown party accessed certain files” on the network (duh). The press release says the files were accessed on the 28th but the notification filed with the Maine AG says it was February 11.

Well whatever. Here’s what happened after discovering the breach, bringing the experts in to figure out how bad it was, and concluding the investigation on September 26:

DA&E began a comprehensive review of the files at issue to determine the information the files contained and to whom the information related. DA&E’s review included the assistance of third-party data review specialists and determined the potentially impacted information included the following types of information related to some patients of hospitals in the Aurora area including name, address, date of birth, Social Security number, medical treatment/diagnosis information, dates of service, health insurance provider name, health insurance claim information, and/or treatment cost. [Emphasis ours]

DA&E notified law enforcement of the incident. The firm “has no reason to believe any of the information described above has been misused” but is providing 12 months of credit monitoring and identity protection from IDX including CyberScan dark web monitoring. IDX Complete costs $355.32 a year which means the retail cost to cover 82,207 people for just a year would be more than $29 million. Surely the firm isn’t paying retail.

DA&E is presumably too small to appear at all on the INSIDE Public Accounting Top 500 (the last firm on the list is Shannon & Associates of Kent, Washington with revenue of $6,063,000). According to this their revenue is $3.5 million, Dun & Bradstreet says sales revenue is $0.86 million. Who knows, who cares.

In a separate consumer notification that appears to be related to this breach as it occurred during the same time period, 3,687 people were notified that their name and Social Security number were accessed by whoever was digging around in DA&E’s network back in February.

Anyone else feel wildly uncomfortable about your private medical information just sitting there on some tiny accounting firm’s server ripe for the looting by bad actors?

The post DAE Get Sick of Hearing About Accounting Firms Getting Their Data Breached? appeared first on Going Concern.

Deloitte has added Greenhouse #6 to its stable of Greenhouses across the US in San Francisco, New York, Washington, Houston, Deloitte University in Westlake, TX, and now Chicago.

What are Greenhouses? “Deloitte Greenhouses are cutting-edge physical spaces located around the world designed to help clients tackle their complex problems,” says Deloitte. That’s not really helpful is it?

Digging deeper, we find Deloitte uses scent to “enhance group productivity” at corporate Greenhouse sessions. Not making this up. Here’s what they say:

Quick, which is your most powerful sense? It isn’t sight. It isn’t sound. It’s smell!

Your sense of smell is more than a million times more sensitive. And as many people know, scent has a powerful effect on our emotions, memory recall, and state of mind.

Many innovative workplace designs expend most of their effort on sight and sound [Ed. note: the CIA is a fan of this too], but often forget about scent. Did someone think we were motivated by the smell of office carpet and printer toner? It’s time to give the olfactory nerve some respect.

Ah, this explains why you have trouble getting work done at home when your cat just dropped a fat log in the next room.

When participants come to The Deloitte Greenhouse® space to solve complex problems, we consider the multi-sensory experience that can impact a participant’s cognition, physiology, and behavior—all critical in promoting disruptive thinking and productive action. And as part of that, each dedicated Deloitte Greenhouse® space draws upon the science of scent to help Lab participants shift mindsets, accelerate breakthroughs, and confound expectations.

Our experience designers call it “holistic sensory activation.” You may just think “hmm, that smells nice.” These elements are just another tool that helps you and your colleagues work together in ways that will blow away your previous workshop experiences. When you visit a Deloitte Greenhouse® space, you’ll know from the moment you walk in–innovation is in the air.

Smells like the refreshing aroma of cash in Deloitte’s pocket.

If anyone’s interested, they’re hiring Lab Leads, Lab Managers and Lab Producers. Relevant Fishbowl discussion.

Earlier:

The post Deloitte Unveils Its Chicago Trip Cave appeared first on Going Concern.

According to exclusive reporting by Mark Maurer at WSJ, PwC will be laying off about 1,800 people, or about 2.5% of the workforce. That’s PwC US, guys. The reason given is “restructuring its products and technology group to simplify operations and address declining demand for certain advisory services.”

The Big Four accounting firm is in the process of cutting employees in the U.S. and elsewhere, primarily in its U.S. advisory and products and technology operations, according to people familiar with the matter. The cuts, about half of which are offshore, span employees ranging from associates to managing directors and include business services, audit and tax, the people said.

Wait, they’re cutting offshore people? What is happening. The worst part is that the firm won’t be informing the soon-to-be-axed until October, according to WSJ’s sources.

We were informed last year that PwC would be raising the bar in performance reviews for the express purpose of trimming some fat without outright laying them off and it sounds like that continued this year. That and a soft return-to-office must not have been effective enough to avoid this unfortunate situation.

The last time we wrote about PwC layoffs on our side of the world was back in 2009: People Are Still Talking About Those PwC Layoffs. Allow us to quote a bit of that article written 15 years ago:

It’s rough out there. And the firm making people sweat it out for a month before they find out if it’s their head on the chopping block isn’t making it any easier.

PwC Laying Off 1,800 Employees as It Plans Restructuring of Products Business [Wall Street Journal]

The post Layoff Watch ’24: PwC is Giving 1800 People the Axe Next Month appeared first on Going Concern.

US partners at EY have been told the firm will hold back some of their pay for 2024 after a tough financial year that has left the accounting firm’s leaders facing criticism from their rank and file.

The decision to defer around 2 per cent of partners’ annual compensation was taken to help the firm manage cash flow, according to people familiar with internal communications, and has compounded disappointment over relatively modest pay increases for the financial year that ended in June.

…

EY has also cut the proportion of expected profits for the current year that it pays partners in advance in monthly installments, deferring more than usual to be paid after the end of the fiscal year.

So we can safely assume those accounting tricks they were going to use to plug the giant hole left by Project Everest didn’t work out eh? Managing Partner Julie Boland apparently got an earful from partners on a recent webcast, partners being annoyed that they didn’t get the million-dollar payouts Everest cheerleaders promised and wanting someone to pay for this whole mess. Remember when Carmine said the firm was missing out on $10 billion in consulting cash due to conflicts of interest Project Everest would have liberated it from? Maybe they shouldn’t have named it after a mountain known for hosting hundreds of dead bodies belonging to brave and adventurous people who attempted to climb it.

Let’s update that old slide EY created to sell the Project Everest audit/consulting split to staff.

Related:

Anyone at EY who got boned on a promotion and/or bonus this year — and there were many — should at least feel somewhat better knowing partners got screwed a little too. Maybe.

Will the deferred pay make its way back into partners’ pockets when consulting warms up again? Nope. FT says they’ll have to wait until they retire or leave “since it will be added to the capital they are required to keep in the firm.”

EY revenue isn’t out yet, it’s either them or PwC due to report next after Deloitte. Our guess was PwC due to their recent layoffs which often accompany crunching of the final numbers for the year but who knows at this point. EY’s revenue results usually show up mid-to-late September and PwC in October. Clearly EY is deferring the matter.

What we do know is it’s safe to assume Deloitte has won the revenue race for FY24.

EY to hold back some pay from US partners after tough year [Financial Times]

The post Well F**k EY Partners Then I Guess appeared first on Going Concern.

The motivational poster in the background is

PwC UK is restructuring. That’s rarely good news, especially given recent layoffs and lowered partner payouts they’ve had in the last year or so.

PwC’s new UK chief has launched an overhaul of its operations in the country, which will involve creating a standalone technology and artificial intelligence unit, in a move that bosses acknowledged could be “unsettling” for staff.

Yeah, that doesn’t sound good.

The Big Four accounting firm told employees last week that it would embark on a reorganisation of areas of the business affecting about 2,700 staff and partners, adding that it was part of its “new vision to become the pre-eminent firm”, according to a document seen by the Financial Times.

Under the plan, PwC will create a “digital delivery unit” focused on tech innovation, AI engineering, cloud and data. The firm will also overhaul parts of its consulting, deals, risk and tax practices by moving and merging certain functions, creating six new teams.

This story was mistakenly left out of Friday Footnotes so putting it here instead. The AICPA is putting in work for taxpayers affected by Hurricane Helene:

The IRS announced relief for taxpayers in all or part of seven states that Hurricane Helene damaged (IR-2024-253). The AICPA, which requested IRS relief in a comment letter, on Thursday also requested filing extensions from the Financial Crimes Enforcement Network (FinCEN) related to the filing of beneficial ownership information (BOI) and reports of foreign bank and financial accounts (FBAR) for major disaster victims.

The IRS is providing disaster relief for individuals and businesses affected by Hurricane Helene, including all of Alabama, Georgia, North Carolina, and South Carolina. The relief also covers 41 counties in Florida, eight counties in Tennessee, and six counties and one city in Virginia.

BDO unironically released a survey about what clients expect from their audit firms.

The inaugural 2024 BDO Audit Innovation Survey, released today, finds that companies increasingly expect their audit firms to leverage advanced technologies like AI to enhance the audit process, believing that this will lead to a higher-quality audit. However, survey results also indicate that companies believe working with experienced, effective audit professionals is just as important as ever, even with the advent of new technologies.

Highlights:

• Finance leaders believe technology can improve audit quality: Just over half of respondents anticipate technology will enhance audit quality (54%); however, finance leaders continue to place high importance on auditor industry knowledge and professional skepticism as contributors to a high-quality audit.
• Mindfully deployed technology unlocks new levels of trust: 63% of senior finance leaders say trust is somewhat or significantly enhanced for them and their key stakeholders when auditors use advanced technology, and 64% say they look for a firm to use AI before even engaging with an auditor.
• Finance leaders will leverage AI to supplement the talent shortage: Although recruiting experienced accountants is the top strategy for companies grappling with the labor shortage, 61% plan to improve workforce inefficiencies with AI.

Cool, now do one about offshore work.

I learned something new today thanks to the Zoomers on TikTok obsessed with Lyle and Erik Menendez. Apparently their dad’s dad owned an accounting firm in Cuba:

José Menendez came to the United States as a penniless teenager and was determined to succeed, demanding excellence of himself and later his two sons, Lyle and Erik. However, the Menendez brothers would eventually say that drive for prestige and fortune came with a dark side that nobody knew about—leading them to take deadly action.

José Menendez was born in Havana, Cuba, in 1944. According to crime researcher and author Rachel Pergament, his father was a soccer player who owned an accounting firm, while his mother was a star swimmer and member of the country’s sports hall of fame. He had two older sisters, Terry and Marta.

AND their dad got his first job at what would eventually be PwC:

Now with a family to support, José was more determined than ever to succeed in America. According to The Los Angeles Times, he picked up his first professional job at the Coopers & Lybrand accounting firm. One of his clients, Lyon’s Container Service in Illinois, was so impressed by his work that the company hired him away to become its comptroller. Within three years, José was company president.

Well I guess I need to force myself to watch one of these new documentaries because I was a kid when the Menendez brothers’ trial happened back in the 90s and certainly wouldn’t have been interested in their dad getting his start in Big 4. The Big 4 for me back then was Mountain Dew, Doom, Nuthin’ but a ‘G’ Thang, and sleeping until noon.

Did you guys see this thing with a Deloitte principal leaking a text conversation he had with JD Vance back in 2020? We really should write it up. Well now apparently Deloitte is getting some heat from the red side, reports Washington Post:

Republicans backing Donald Trump are threatening Deloitte, a consulting firm that is one of the federal government’s largest business partners, with the loss of billions of dollars in contracts because an employee shared messages from 2020 in which GOP vice-presidential nominee JD Vance criticized the former president’s record.

…

“I’ve never seen anything like this,” said Kedric Payne, senior director of ethics at the nonpartisan Campaign Legal Center and former deputy chief counsel in the Office of Congressional Ethics, adding that the goal was probably to pressure Deloitte into firing the worker. “You can’t imagine that if one employee out of thousands made a statement that offended an official, that then the government contracts would be in jeopardy.”

When WaPo first reported it they didn’t name the principal — it’s Kevin Gallagher (don’t worry that cat has been out of the bag for a while) — so Breitbart wrote this on September 27: Exclusive — Deloitte Consultant Behind Ethically Questionable Leak of JD Vance Communications to Washington Post.

This could get messy.

EY is still dealing with headaches related to its work on NMC Health. If you can call it work. FT:

EY missed a chance to spot fraud promptly at collapsed hospital administrator NMC Health because it failed for seven years to access a key financial register, according to a $2.7bn legal claim brought by administrators.

A skeleton argument prepared for a procedural hearing at London’s High Court on Friday said the auditor would have “quickly” identified the alleged fraud that led to NMC’s collapse if it had secured access to the company’s general ledger. Inspecting the general ledger — a record of all a company’s financial transactions — is regarded as a basic yet critical task in an independent audit.

Earlier:

Young professionals at PwC Belgium will be driving to and from the client site in new Mini Coopers:

According to PwC Belgium, the procurement is likely to enable the company to meet its fleet emission targets faster than initially assumed. In 2021, the Belgian PwC subsidiary committed to reducing the emissions of its vehicle fleet by 20 per cent every two years – with the aim of being emission-free by 2030. By phasing out 200 BMW 1 Series and purchasing new electric Minis for the company’s young professionals, it could now reach its target as early as 2028.

[M]ore than three-quarters (77%) of its vehicle fleet is now electric or partially electric. However, the company does not state the total number of cars in its fleet. A total of 200 Mini Cooper electric vehicles will be delivered by the end of the year. At a recent event organised by manufacturer Mini Belux and PwC Belgium, almost 160 young employees were welcomed in Vilvoorde to introduce them to the vehicle and hand over the keys.

Why don’t all PwCs give out Mini Coopers? It’s perfect!

I think that’s enough for now. Let me know by email or text if you spot a story we should write about, have a tip, or just want to share an observation on the current state of the accounting profession. I will be deeply engrossed in Silent Hill 2 beginning tomorrow but promise I’ll get back to you.

Have a great week! That exclamation point I meant.

The post Monday Morning Accounting News Brief: Ruh Oh, PwC’s Restructuring; Boycott Deloitte? | 10.7.24 appeared first on Going Concern.

PayPal Completes Its First Business Transaction Using Stablecoin [Bloomberg]
They paid an EY invoice LOL
PayPal Holdings Inc. completed its first business payment using its proprietary stablecoin as a way to demonstrate how digital currencies can be used to improve often-clunky commercial transactions. PayPal paid an invoice to Ernst & Young LLP on Sept. 23 using PYUSD, the stablecoin the firm launched last year, relying on an SAP SE platform to complete the transaction. SAP’s platform, known as the digital currency hub, allows enterprises to send and receive digital payments instantly, around the clock. The invoice amount wasn’t disclosed.

SEC Charges Olayinka Oyebola and His Accounting Firm With Aiding and Abetting Massive Fraud [SEC]
The Securities and Exchange Commission charged Olayinka Oyebola and his Public Company Accounting Oversight Board-registered accounting firm, Olayinka Oyebola & Co. (Chartered Accountants), with aiding and abetting a massive securities fraud perpetrated by Mmobuosi Odogwu Banye, also known as Dozy Mmobuosi, and three related U.S. companies that Mmobuosi controlled (the Tingo entities). The SEC recently obtained a $250 million final judgment against Mmobuosi and the Tingo entities.

Tax

There’s some Intuit drama coming to a boil. See here:

I just watched two hours of the annual Intuit investor meeting and the Q&A at the end was very interesting.

Poll question at the end.

Please repost this thread so we can gather a lot of opinions about Intuit.

What a change… I actually remember back when Intuit was a partner…

— Mike Sylvester, CPA (@MikeSyl36625988) October 3, 2024

Big 4

After a Deloitte client’s $2.4B tax dodge faltered, the accounting giant won’t say if it helped others exploit the same loophole [International Consortium of Investigative Journalists]
Late last year, the Internal Revenue Service notched a significant win in its fight against high-end tax dodging when a federal judge in Colorado upheld the agency’s challenge to a $2.4 billion tax deduction claimed by Liberty Global, a multinational telecommunications firm. The case, which centered on a complex offshore tax maneuver that generated the huge write-off for the corporation, was described by one industry observer as the “worst nightmare for tax planners” who seek out vulnerabilities in federal tax law. Yet the role of Liberty Global’s own tax advisor — the accounting giant Deloitte — has received little scrutiny, despite U.S. authorities describing the firm as playing a key role in designing the scheme. Liberty Global’s controversial tax maneuver, code-named “Project Soy,” shuffled assets between the firm’s companies in countries such as Belgium, the Netherlands and Slovakia in order to exploit a loophole in a landmark Trump-era tax law, according to court filings. The Justice Department asserted that Deloitte had approached Liberty Global with the original idea for Project Soy, a claim Liberty Global has denied in multiple court filings. If Deloitte did market the loophole, as the Justice Department suggested, it could add to a rich history of Big Four accounting firms selling their well-heeled clients on complex and aggressive ways to avoid tax. It would also raise questions about whether other multinationals received the same advice as Liberty Global — and whether additional challenges could be coming.

Evergrande Auditor PwC China Flops in First US Inspection [Bloomberg Tax]
PwC’s Chinese arm, battered from a $62 million penalty for its botched audits of developer Evergrande, struggled to meet basic US auditing requirements including testing property and equipment values and conflict of interest rules. Public Company Accounting Oversight Board inspectors found fault with each of the seven PricewaterhouseCoopers Zhong Tian LLP audits they reviewed last year, according to results the regulator released on Wednesday.

What’s this?

Just got this in the mail, I was laid off over a year ago.
byu/NoAdhesiveness3384 inBig4

KPMG Appoints Maura Hodge to Lead US Sustainability Practice [ESG Today]
Professional services firm KPMG announced that it has appointed Maura Hodge to lead its US sustainability practice, taking over the role of US Sustainability Leader from Rob Fisher, who in turn has been appointed KPMG US Consulting Sector Leader for Financial Services and Insurance Hodge has been with KPMG for nearly 20 years, most recently serving as ESG Audit Leader, leading the firm’s national efforts around ESG measurement, reporting, and assurance.

Firm Watch

Energy equipment supplier Holtec files lawsuit against accounting firm CBIZ [Reuters]
U.S.-based energy equipment supplier Holtec International has filed a joint lawsuit with two other firms against accounting firm CBIZ and its senior executive Lonnie Davis, the company said on Thursday. The company also alleged business misconduct, including fraud, breach of contract and accounting malpractice, against CBIZ and two former Holtec executives, Chief Financial Officer Robert Galvin and General Counsel Andrew Ryan.

CliftonLarsonAllen to move Valley operations to Hayden Ferry Lakeside campus [Phoenix Business Journal]
A major accounting firm with national reach is moving its local operations to Tempe Town Lake. CliftonLarsonAllen, or CLA, announced Oct. 1 it is taking about 55,000 square feet at the Hayden Ferry Lakeside office campus in Tempe. CLA is expected to move into the building and operate a new “connection center” and office across multiple floors beginning in December 2025. That connection center is a dedicated space for employee learning and development, leadership training, collaboration, events and client meetings.

Deloitte once again named Tax Firm of the Year at the ITR Asia-Pacific Tax Awards 2024 [Deloitte]
The “once again” is a little sassy, no?
The International Tax Review (ITR) Asia-Pacific Tax Awards 2024* rankings were recently announced and Deloitte is extremely proud to announce that we have been named as the New Zealand Tax Firm of the Year for the second consecutive year. In the wider Asia-Pacific region, Deloitte was also the winner of:

• Tax Firm of the Year
• Transfer Pricing Firm of the Year
• Global Executive Mobility Tax Firm of the Year
• Indirect Tax Firm of the Year
• Tax Compliance and Reporting Firm of the Year
• Tax Innovator of the Year
• Tax Technology Provider of the Year

Baker Tilly Acquires Alirrium, Expanding Robotic Process Automation and AI Capabilities [Baker Tilly]
Effective Nov. 1, the move strengthens Baker Tilly’s capabilities in RPA, artificial intelligence (AI) and machine learning to better support businesses in modernizing their operations and improving their competitive edge. Alirrium is known for its expertise in intelligent RPA integration, serving a diverse client base that includes both government and commercial enterprises.

Citrin Cooperman Announces 2024 Partner Class [Citrin Cooperman]
Congrats to all nine of them. We mean that.
“I could not be prouder of this dynamic group of leaders,” said Citrin Cooperman Advisors LLC CEO Alan Badey. “They embody the best of Citrin Cooperman and have all demonstrated a deep commitment to the core values that drive our success. I am confident that their collective focus on strengthening our culture, providing outstanding client service, striving for professional excellence, and driving innovation will serve the Firm well in 2024 and beyond.”

BDO USA Announces New Principal Class [BDO]
BDO USA has promoted 56 professionals to principal, effective October 1.

Brown Plus Grows Firm by Welcoming Three New Team Members [PRWeb]
Wait, did they really put out a press release for this?
Martina Shea joined Brown Plus as an Outsourced Accounting Senior Associate with 20 years of accounting and office management experience. She has an Associate’s degree in Accounting from Harrisburg Area Community College. Martina is located at the Brown Plus office in Hanover, Pennsylvania.

Talent

City’s accounting firms see a slowdown in hiring amid industry-wide workforce shortage [Crain’s New York]
New York’s largest accounting firms’ growth may finally be leveling out; their headcounts increased by an average of just 6.8% in 2024, down from a 12% uptick last year and a 34% jump in 2022.

Is your firm hiring? If so, you’ll want to check out this week’s top remote accounting candidates from Accountingfly.

The post Friday Footnotes: Intuit Pisses Off Tax Practitioners; Deloitte Won’t Talk About Tax Dodging; Whatcha Up To, KPMG? | 10.4.24 appeared first on Going Concern.

When she left the Green Dot at the end of FY19, Engelbert made the transition to commissioner of the WNBA where she remains to this day, taking flak from fans for being too businesslike and speaking in PR. Those years of Deloitte training are really paying off for her. At the same time, the WNBA is stronger than ever with 2024 its most-watched regular season in 24 years, game attendance at 22-year highs, and merchandise sales up 601% from 2023.

With WNBA playoffs underway, Fortune decided to see what she’s up to and asked what her average day looks like.

8:30 a.m.: Engelbert arrives at the office, often a bit earlier than her colleagues. After spending the majority of her career in the corporate world, Engelbert says she had to adjust when she entered the sports industry.

“You got in really early when you were in the corporate world, you were trying to beat the traffic that commute and you had meetings, sports, because there’s so many games and so many things that night and weekends,” Engelbert said.

“My first day, I got in at 7:30, but no one else arrived until about nine,” she said. “Now I aim to get in around 8:30 or 9.”

Oh and she still practices SMOR, a recharging technique she learned in her public accounting days. “I learned this at Deloitte because when you’re running a firm of that size, you have to find time,” she told TIME in 2022. “We dubbed them smors. My EA used to put them on my calendar: Small moments of recovery. You need moments during the day.”

Yep, still taking those small moments of recovery and still under the same acronym.

12 p.m.: Engelbert adheres to a time-saving regime she refers to as “SMORE,” an acronym for “small moments of recovery.” She adds these to her calendar, seeing lunch as a networking opportunity or a chance to take a break and get outside.

“Usually over the lunch hour, I need to get out. If I’m working from home, I go for a walk and then have lunch when I get back,” she said.

Good reminder to all of us to go get a little sun on our cheeks in the middle of the work day. Especially now that daylight is quickly slipping away.

From Deloitte CEO to WNBA commissioner: Inside Cathy Engelbert’s daily routine [Fortune]

The post Five Years After Leaving Deloitte, Cathy Engelbert is Still the First Person in the Office in the Morning appeared first on Going Concern.

Today we announced that Gurbir S. Grewal, Director of the Division of Enforcement, will depart the agency, effective Oct. 11, 2024. https://t.co/4wXy6ka0qM pic.twitter.com/mnVf378bPi

— U.S. Securities and Exchange Commission (@SECGov) October 2, 2024

Sanjay Wadhwa, the Division’s Deputy Director, will serve as Acting Director, and Sam Waldon, the Division’s Chief Counsel, will serve as Acting Deputy Director. “I’m pleased that Sanjay Wadhwa has said yes to taking on the Acting Director role,” said SEC Chair Gary Gensler. “He has served as part of a remarkable leadership team, along with Gurbir, as Deputy Director and has been with the agency for more than two decades. He has shown strong leadership, is widely respected among his colleagues, and has provided invaluable counsel to the Commission. I’m pleased that Sanjay will be joined by Sam Waldon, currently Enforcement’s Chief Counsel, who is becoming Acting Deputy Director. Sam has provided sound advice to the Division and the Commission on critical legal issues.”

“While we have faced and overcome many challenges over the last three plus years, there has been one constant throughout: the public servants of the Enforcement Division stand ready to do everything they can to protect investors and market integrity. Their expertise, professionalism, and dedication are, indeed, unparalleled, and it has been the privilege of a lifetime to have been able to call them colleagues,” said Mr. Grewal in the press release. “From recalibrating penalties and remedies to confronting emerging risks to holding issuers, insiders, and gatekeepers accountable, I am incredibly proud of all that we’ve accomplished as a Division during my tenure. I am grateful to Chair Gensler not just for the opportunity to lead the Division, but also for his unwavering commitment to investor protection and support of a robust enforcement program.”

The verbal smackdowns Mr. Grewal consistently hands out to anyone running afoul of the SEC will be missed most of all. Truly a poet among regulators.

The post The SEC’s Silver-Tongued Enforcement Director Is Leaving appeared first on Going Concern.

The most recent incident was the second time SS numbers were stolen from CBIZ (that we know of), the first being last year’s MOVEiT breach that affected EY and PwC as well.

On September 19, a tiny little firm in Louisiana called Wright, Moore, DeHart, Dupuis & Hutchinson, LLC informed 127,431 people that their personal data including first and last name, Social Security number, driver’s license number, financial account number, passport number, and medical/treatment information may have been accessed by unauthorized explorers digging through their systems. The “what happened” section of the data breach notification doesn’t give many details, only that the firm noticed “unusual network activity” on or around July 11 of last year. The notification filed with the Maine Attorney General states the breach was discovered on September 10, 2024 but the firm said in the notification that an independent review into what data had been compromised was completed on July 18, 2024.

This is what they said:

On or around July 11, 2023, WMDDH became aware of unusual network activity and immediately took steps to secure our systems. We launched an investigation with the assistance of leading cybersecurity experts to determine what happened and whether sensitive or personal information may have been affected during the incident. As a result of the investigation, we identified that certain WMDDH data may have been acquired without authorization. WMDDH then engaged an independent team to conduct a comprehensive review of all potentially affected data, and on May 8, 2024, that review determined that your personal information may have been affected. WMDDH then worked diligently to identify contact information to effectuate notification and prepare the services being offered to affected individuals, as provided in more detail below. This process was completed on July 18, 2024.

Why does an accounting firm with 55 people working there (including partners and support staff) have Social Security numbers, driver’s license numbers, financial account numbers, passport numbers, and medical/treatment information data for nearly 130,000 people? It doesn’t say. But really makes you think about who has your data and what they’re doing to protect it.

Law firms are already promoting a potential class action suit.

Earlier:

The post A Firm With 55 People Finds Itself at the Center of a Data Breach Affecting 127,431 appeared first on Going Concern.

FT says in a fresh story that 54-year-old rapper Jay-Z — real name Shawn Carter aka Mr. Bey — severed his relationship with BDO “following accusations that a staff member had been stealing money from customer accounts.” That former staff member is Vanessa Rodriquez, assistant to Andre N. Chammas who is a tax partner at BDO’s Miami office. Rodriquez was fired in July 2022, after which Fat Joe — real name Joseph Cartagena — noticed “some accounting irregularities” with his accounts. Wrote TMZ in 2022:

For starters, Joe says his wife Lorena’s name was used to open AMEX accounts and make huge unauthorized purchases, including $40K in charges for Uber rides and UberEats deliveries, as well as tuition payments for Rodriguez’s daughter.

Joe also claims he discovered one of his entities, Sneaker Addict Touring, was missing large deposits — to the tune of more than $300K. He says there were similar irregularities with other entities.

As for the Ponzi part of the alleged scheme — Joe claims the firm also defrauded Jose Iglesias of Colorado Rockies, Luis Garcia of the Houston Astros and former Chicago White Sox player Dayan Viciedo.

In the suit, he says AMEX accounts were opened under their names as well, and the money flowed between all of their accounts to keep the Ponzi going. The players are not plaintiffs in the suit, and Joe makes it clear he feels they were victims … just like himself.

Although the firm denied the allegations, BDO eventually leaned back and settled with Fat Joe. The terms were not disclosed.

Said FT:

Staff working for Jay-Z, whose real name is Shawn Carter, were angered by how BDO responded to the accusations of theft from Fat Joe, who is a client of Jay-Z’s entertainment company Roc Nation. They felt the accounting firm became overly defensive and failed to quickly provide Fat Joe with full access to his financial affairs, said people familiar with the matter and his 2022 lawsuit.
That anger led to Jay-Z’s departure as a BDO client in 2023, the people said, within months of Fat Joe leaving.

Fellow Roc Nation artist Megan Thee Stallion also dropped BDO. Their sources are a little late on this but it’s the first we’ve seen it reported. All three stars came to be BDO clients after the firm acquired Miami firm Morrison, Brown, Argiz & Farra in early 2021, at the time Florida’s largest accounting firm.

Here’s Fat Joe warning everybody not to trust accountants on a Breakfast Club Power 105.1 FM appearance in 2022:

Fat Joe’s lawsuit against BDO is embedded below for your reading pleasure.

The post Jay-Z Has 99 Problems But BDO Ain’t One appeared first on Going Concern.

FT wrote:

Richard Moriarty, chief executive of the Financial Reporting Council, wrote on Thursday to the bosses of the UK’s top accounting firms, saying the regulator was not “in principle” against private equity investment in the sector but there were “important risks that will need to be carefully managed”.

The intervention signals the regulator’s concerns that private equity investment could erode audit firms’ rigour and independence in auditing the accounts of large companies — key to maintaining investor confidence in the accuracy of companies’ accounts.

To be clear, the FRC isn’t wholly against private equity investment. “The FRC is not in principle against a greater participation of external private capital in the UK audit market.” said the letter dated September 26, embedded below in its entirety if you want to read the whole thing. “The FRC’s role is to protect the public interest and support growth. We are primarily concerned with outcomes and behaviors by audit firms such as delivering high quality audits, upholding high standards of ethical conduct, and fostering a culture towards always acting with the public interest in mind.”

“We recognize that access to external private capital could, in the right circumstances, have potential benefits for the UK audit market,” the FRC said. “However, there are important risks that will need to be carefully managed. As with any other major change within an audit firm that has the potential to affect its leadership and culture, a change in ownership structure via external private capital must be able to maintain and enhance over time the important public interest dimension of audit. It must also be able to protect independence as required by law and allow for any threats to that independence as a result of conflicts to be effectively safeguarded.”

On the expectation to rat themselves out, the FRC said that “a firm that is interested in, or considering, a change of ownership to introduce private capital should engage with the FRC (in addition to its Recognised Supervisory Body) at an early stage and with full candor, assured that all such discussions will be treated in strictest confidence.” In other words, the FRC wants firms to come to them well before any deal is struck. “We would also welcome engaging directly and in confidence with any investors considering entering or expanding into the UK audit market to help explain the regulatory framework and expectations,” they said.

Being the ignorant Americans that we are, we’re curious if the FRC can actually require firms to do this without official rulemaking or if this is them overreaching their authority under the banner of “we’re the regulator and we say so”? The letter does mention the public interest — both in fact and appearance — which certainly falls under the jurisdiction of the FRC. “Like for any other significant change relating to a UK firm, any party interested in a change of ownership by introducing external private capital must be able to continue to provide assurance that it will be able to support the public interest, the independence dimensions of audit and all applicable regulatory expectations,” the FRC said. “It is important to demonstrate that the legal requirements, including those pertaining to control, are met both in substance and in form.”

In the US, firms that have taken private equity investment have thus far dodged any independence concerns by forming two entities operating under one banner — the PE-backed one doing advisory and tax work, and a siloed assurance entity that’s independent from outside capital (in theory).

In its annual audit quality report issued last month, the FRC warned that private equity investors “may lack a deep understanding of audit practice objectives, and the public interest incentive to deliver audit quality. A lack of clarity or long-term thinking regarding PE exit strategies also raises concerns about maintaining audit quality and public interest motives over future years.”

The post Brit Audit Cops Want Firms to Snitch if Private Equity is Sniffing Around appeared first on Going Concern.

Publications around the world continue to discuss the tragic sudden death of a young auditor at EY India and dirt keeps making its way to the surface. This is Latin Times:

Accounting Firm Where Woman Died from ‘Overwork’ Has Operated for Decades Without a Cap on Work Hours

Soon after Shailendra Pol, Additional Labor Commissioner for the Indian state of Maharashtra, began the investigation, he noted that EY’s registration under the state’s Shops and Establishments Act was not current. The permit is required to help regulate how many hours an employee works – nine hours per day and 48 hours per week.

While EY had applied for the registration in February 2024, it was rejected because the company had not applied since 2007. The office was given a total of seven days to address its non-compliance.

More from Reuters: Probe into EY Indian employee’s death finds office lacked labour welfare permit

Related to this, The Institute of Chartered Accountants of India (ICAI) has established a dedicated group to recommend ways to improve work-life balance and reduce stress among Chartered Accountants.

This recent r/CPA vent post isn’t being received too well (“Stop with the xenophobic drivel.”):

US CPA doesnt mean anything now thanks to AICPA

Btw, did u know AICPA is allowing anyone from overseas to take United States CPA exams in their countries? Yes the same United States CPA designation u guys are studying for.. They opened up testing centers all around India in 2020 and Philippines in 2024 and allowing people there without any US college credits to sit for exams. Once they pass they will earn the same US CPA license so ur cpa license doesnt mean a damn thing in couple of years. Also big fuck u in the face is that India only require 120 hours of college credits (none has to be from us colleges) to test for US cpa. This career is going to be like a sweatshop here in 3-5 years once the job market is full of US CPAs from overseas who are happy to do this job for 25% of US salaries

Edit- this is against AICPA selling US CPA licenses overseas to benefit big american accounting firms and PE corporations buying up accounting firms here in USA. AICPA is not looking out for accountants here in USA and their actions show they are in beds with US firms to get cheap labor. This post is not to say people overseas are bad or not good at accounting.

A tale of two headlines.

The Telegraph:

Deloitte partners suffer £48,000 pay cut

Deloitte cut its UK partners’ pay packets by £48,000 in the last financial year as it sought to promote more people to its senior ranks.

The “big four” firm said average partner pay was down to £1.012m for the year to the end of May, compared with £1.060m in 2023. It said this reflected the fact it had been increasing its number of people in senior posts, with 80 of its employees promoted to partner over the past 12 months.

£48,000 = about $64k USD.

Financial Times:

Deloitte UK partners pocket £1mn despite slowdown

Deloitte’s UK partners took home about £1mn on average for the fourth year in a row, despite the Big Four firm suffering a sharp slowdown in revenue growth due to waning demand for its advisory services.

Partners received payouts of £1.01mn on average for the year to the end of May, 5 per cent less than the previous year, following an increase in the number of equity partners who share in the firm’s profits. Its top ranks swelled from 714 last year to 749, while the profit pool to be shared between them remained flat at £756mn.

Deloitte is the only Big Four firm in the UK to report an average partner payout higher than £1mn in the last two financial years.

Yeah, don’t think they’re too worried about missing out on that $64,380 this year.

Elsewhere in the Big D ecosystem, Deloitte India wants to hit $5 billion in revenue by 2030 (which btw is about five years away). They’re currently at $1.19 billion.

Accounting giant Deloitte has set an ambitious target to quadruple its revenue from its India operations to $5bn by the year 2030.

Romal Shetty, the CEO for South Asia, in an interview with Indian news agency PTI, revealed the company’s aspiration to become the preeminent leader in professional services.

During FY23–24, Deloitte India’s revenue reached the Rs100bn milestone, a significant 30% increase.

Former EY top dog Carmine Di Sibio has a new item added to his robust dance card:

Advent International (“Advent”), one of the largest and most experienced global private equity investors, today announced the appointment of former Ernst & Young LLP (“EY”) Global Chairman and CEO Carmine Di Sibio as an Operating Partner. Di Sibio will play an active role in helping the firm identify, source and execute new deals in the business and financial services space and will work closely with Advent’s team and current portfolio of investments.

“We are thrilled to welcome Carmine to our growing roster of talented, specialized and hands-on Operating Partners,” said Chris Egan, Managing Partner at Advent. “After a distinguished career of nearly four decades at EY, Carmine brings an incredible wealth of knowledge and expertise in the professional services, financial services and technology industries, which we believe will be invaluable as we continue to expand our investments in this space. We are excited about the opportunity to leverage Carmine’s experience to drive even further growth and innovation across our firm and portfolio.”

Di Sibio currently holds director positions on the boards of PayPal and Prudential Financial, as well as playing an active role in the World Economic Forum.

Two students from the University of Missouri’s Robert J. Trulaske, Sr. College of Business discuss their experiences with the KPMG Global Internship Program:

Ryan Klostermann and Katie Mitchell were among just 25 interns selected from a pool of 650 applicants nationwide. Klostermann gained valuable experience in Aberdeen, Scotland, while Mitchell completed her four-week internship in Malaysia. KPMG firms operate in 143 countries and territories across the globe, offering audit, tax and advisory services.

China told PwC to get their shit together and not screw up again, says South China Morning Post:

China’s vice-finance minister met the global chair of PwC in Beijing, after the accounting firm’s mainland unit was slapped with a hefty fine and suspended for six months, according to a finance ministry statement on Monday.

Vice-Finance Minister Guo Tingting told PwC’s global chair Mohamed Kande during their meeting on September 19 that he hoped the Big Four firm would strictly abide by China’s laws and regulations, and adopt effective measures to correct mistakes, the statement said.

ThinkChina wonders out loud if PwC will be able to pull off this reasonable request in this long read:

[Big read] Colluding in deceit: Will PwC get a second chance in China after the Evergrande scandal?

Peng Shugang, a lawyer at China Commercial Law Firm (Shanghai), told Lianhe Zaobao that the penalty document from the MOF used the phrase “aware of” 21 times and “should have known” five times, while the CSRC’s penalty statement used the phrases “failed” or “completely failed” five times. Indeed, both agencies believe that PwC’s actions in auditing Hengda showed obvious intentional wrongdoing and gross negligence.

Professor Mak Yuen Teen of the National University of Singapore (NUS) Business School said that the regulatory accusations suggest that it was not just a case of audit failure due to a failure to follow proper audit procedures or exercising professional scepticism, but that of “collusion with the client and likely not limited to just a few staff”.

UK-headquartered PwC is one of the Big Four accounting firms and the highest-earning auditing institution in China in 2022. So, what drove it to take such a huge risk and condone, or even facilitate, Evergrande’s financial deception?

Earlier: China Puts PwC in the Punishment Corner For Six Months and Confiscates ‘Illegal Gains’

Thomson Reuters talked to a guy with all the letters after his name about the future of the audit profession:

A conversation with Jeff Forrestall, CPA, CFF, ABV, CVA, PFS

Q: Are you seeing shifts related to training, recruitment and retention in the audit industry?
Jeff Forrestall: We’ve had to look around outside of the traditional path. I have a couple of attorneys on staff and one of my auditors is an attorney. Great hire. Never had an accounting class in her life.

I have a couple of STEM majors who don’t have any kind of background. Younger prospects have jumped jobs a lot due to COVID, so they don’t have the background we need.

We’re looking for more experienced people. And we’re actually home-growing them ourselves with the AuditWatch program. We make everyone go through it.

Long story short, the industry is changing. National and regional firms are traveling auditors to death.

Starting next year, we will work a 40 hour workweek. Our audit groups don’t travel. We’re the only ones because we’re trying to attract and retain people. So within the last six months, I’m seeing a lot of auditors are applying to us again.

We like you, Jeff.

Adviser Joseph Floyd discusses the PCAOB’s new quality control standard in Bloomberg Law:

The new requirements are akin to combining the mandate to document, test, and certify the effectiveness of a public registrant’s internal controls under Section 404 of the Sarbanes-Oxley Act—the law that created the PCAOB—with creating an audit committee equivalent for oversight of an audit firm’s quality control system.

Section 404 greatly improved the quality of financial reporting for public registrants and lessening restatements, and QC 1000 has the potential to improve audit quality and lessen audit deficiencies. The need for improvements in audit quality is obvious when reviewing the growing deficiency rates reported for the industry based on PCAOB inspections.

The concept of an independent oversight function for audit firm quality isn’t new. Individuals may recall the Volcker plan in early 2002 to save Arthur Andersen in its final days. The plan involved former Federal Reserve Chair Paul Volcker leading an oversight function for Andersen’s audit quality. The Volcker plan never happened but now, decades later, the concept will become reality for the entire audit industry.

For the new quality control requirements to reach their full potential, the external function’s role must be highly respected within the audit firms; for it to be most effective, recruiting individuals who will be independent is critical.

Aaaand that’s plenty of news for now. Please let me know if you spot something interesting, have a tip to share, or just want to complain, complaining is allowed too. Encouraged, actually. Reach me via text or email, or hit us up on the artist formerly known as Twitter. Byyyye.

The post Monday Morning Accounting News Brief: EY Didn’t Have a Labor Permit; Deloitte Partners Allegedly Suffer But Not Really | 9.30.24 appeared first on Going Concern.

Hot Takes

Welcome the whip-crackers [Accounting Today]
Dan Hood has an, uh, interesting perspective on private equity’s influence in the accounting profession.
Providing the capital necessary to fund the retirement plans of the profession’s baby boomer and Gen X partners has been a major reason that accounting firms are turning to private equity — but that in itself will bring structural changes that make it easier to hold all members of the partner group accountable. That’s because PE doesn’t just bring the capital that accounting firms lack; it also brings a seriousness about goals and bottom lines and key performance indicators that accounting firms have often let slip in the interest of maintaining a collegial atmosphere. PE firms also bring more of a willingness to have those difficult conversations: Collegiality is nowhere near as much of a priority for them as profit.

Survey Says

Deloitte: 50% More Professionals Rank Data Privacy as a Top GenAI Concern in 2024 [TechRepublic]
Concerns over data privacy in relation to generative AI have surged, a new report from Deloitte has found. While last year only 22% of professionals ranked it among their top three concerns, this year the figure has risen to 72%. The next highest ethical GenAI concerns were transparency and data provenance, with 47% and 40% of professionals ranking them in their top three this year. Meanwhile, only 16% expressed concern over job displacement. Staff are becoming more curious about how AI technology operates, particularly with regards to the sensitive data. A September study by HackerOne found that nearly half of security professionals believe AI Is risky, with many seeing leaked training data as a threat. Similarly, 78% of business leaders ranked “safe and secure” as one of their top three ethical technology principles, marking a 37% increase from 2023, further demonstrating how the issue of security is top of mind.

Controllers prep for ‘dramatic’ role changes, focus on value creation: EY [CFO Dive]
Over the past decade, CFOs have seen their roles evolve from a purely numbers-focused position to one where they are expected to be a strategic driver for their organizations — and financial controllers are right behind them. Eighty-six percent of controllers believe their role will change “dramatically” by 2030, according to a report by Big Four firm Ernst & Young released Wednesday. While controllers recognize that change is coming, and coming quickly, they “don’t necessarily have a view on what that will look like,” Myles Corson, EY global and EY Americas strategy and markets leader, financial advisory services said. Indeed, 26% of controllers expect their roles will require completely different, or “unknown” skills by the end of the decade, EY’s Inaugural DNA of the Financial Controller report found — meaning both finance chiefs and controllers must prep for a coming future where their roles look very different than they do in present-day.

Talent

Hey employers, are you looking to hire accountants to fill remote or hybrid roles? Accountingfly has some right here! Check out this week’s top remote accounting candidates and sign up for Always-On Recruiting to get a fresh batch in your inbox every week. It’s free!

Audit

PCAOB Sanctions Five Audit Firms for Violations Related to Audit Committee Communications or Reporting Requirements [PCAOB]
The PCAOB imposes censures, $165,000 in total fines, and remedial undertakings that include training and improvement of policies and procedures. Four sanctioned firms failed to make certain required communications with audit committees, as required by AS 1301, Communications with Audit Committees, and/or Rule 3524, Audit Committee Pre-approval of Certain Tax Services. The firms are the following:  Accell Audit & Compliance, P.A. (PDF) – $40,000 civil money penalty and censure; Crowe MacKay LLP (PDF) (Canada) – $30,000 civil money penalty and censure; Ernst & Young AG (PDF) (Switzerland) – $45,000 civil money penalty and censure; Grant Thornton LLP (PDF) (Canada) – $30,000 civil money penalty and censure. Two of these firms, Crowe MacKay LLP and Grant Thornton LLP, also failed to document audit committee pre-approval of certain services, in violation of AS 1215, Audit Documentation. In addition, Accell Audit & Compliance, P.A. failed to communicate in writing all material weaknesses to an issuer’s audit committee, in violation of AS 1305, Communications About Control Deficiencies in an Audit of Financial Statements.

Auditor Proud Day hits decade of international recognition [Accountants Daily]
Auditor Proud Day lands on the last Thursday of every September and is aimed at attracting more people to the profession and celebrating those already working within it. The day is a CA ANZ-led annual social media movement around the world which attracts all peak accounting bodies to celebrate the audit profession.

Cruising the #AuditorProud hashtag, it looks like everyone else forgot about it too. Not these guys though.

Happy #AuditorProud day! Today is about celebrating our #audit teams worldwide who ensure transparency, trust and accountability in today’s financial landscape. Thank you for your commitment and excellence! We are always looking for our #NextGenAuditors: https://t.co/Ps7of7fCQq pic.twitter.com/or2hfiyi4s

— Forvis Mazars Group (@ForvisMazarsGrp) September 26, 2024

Happy Auditor Proud Day! Celebrating our advisors who champion transparency and trust. Thank you for your dedication to excellence! #AuditorProud #AuditorProudDay #Audit #Accounting pic.twitter.com/B2MHhrc01C

— Grassi (@GrassiAdvisors) September 26, 2024

Firm Watch

Deloitte Named ESG Firm of the Year at International Tax Review 2024 Americas Tax Awards [PR Newswire]
Deloitte announced today that it has received four awards at the 2024 International Tax Review (ITR) Americas Tax Awards, honoring its accomplishments delivering market-leading services and solutions. Deloitte was named “ESG Firm of the Year” and “Diversity Equity & Inclusion Firm of the Year,” becoming the first winner of the ESG award category in its inaugural year recognized by ITR. Additionally, Deloitte was named “Tax Technology Firm of the Year” in the Americas region for the seventh consecutive year, as well as “Tax Innovator of the Year” for the fourth consecutive year.

Katz Nannis & Solomon Accounting Firm Sued Over 2023 Data Breach [Bloomberg Law]
Massachusetts-based accounting firm Katz Nannis & Solomon PC failed to protect the personal information of thousands of people that was exposed in a November 2023 data breach, three proposed federal class actions said. Bertha Godbee, Phenicia Brown, and Delores J. Williams alleged in separate lawsuits that KNS breached its duties under common law, contract law, industry standards, and the Federal Trade Commission Act to implement reasonable and adequate measures to protect sensitive data as well as failed to provide accurate and prompt notice of the breach.

PKF O’Connor Davies Welcomes Donald Melody as Partner [PRWeb]
Melody joins the organization’s Public Company and Financial Services practice areas with over two decades of experience conducting and supporting audits and providing consulting advice to broker-dealers, including prior service as a Branch Chief with the Securities and Exchange Commission (SEC) and an Inspections Leader for the Public Company Accounting Oversight Board (PCAOB). “Don’s career spans the auditing spectrum, and his multifaceted background has equipped him with an invaluable and in-depth understanding of the complexities involved with ensuring compliance for organizations of all types,” said Clare Cella, Managing Partner of PKF O’Connor Davies LLP. “In particular, his time with the SEC and PCAOB has afforded him an insider’s perspective into the evolving regulatory landscape that will benefit our clients and our team immensely.”

Barnes Dennig, one of Cincinnati’s largest accounting firms, merges with Indianapolis company [Cincinnati Business Journal]
One of Greater Cincinnati’s largest accounting firms is getting bigger. Downtown-based Barnes Dennig has finalized a transaction to merge an Indianapolis CPA firm into its operations. The deal that will combine Barnes Dennig with Greenwalt CPAs is due to be completed Jan. 1, 2025. “This is a very big deal for us,” Jay Rammes, Barnes Dennig managing director, told me. “It’s quadrupling our presence in that marketplace. You have to be a certain size in a market to build a brand and attract talent. We wanted to get some critical mass there.”

Technology

Building an AI-ready firm: Strategies for responsible integration and growth [Thomson Reuters]
As evidenced in the 2024 State of the Tax Professionals Report, recruiting and retaining new professionals is a top priority given the shortage of tax and accounting talent and a shrinking labor pool. That’s why many accounting firms are now directing more of their energies toward hiring, training, and engaging high-performing staff, as well as cultivating an AI-savvy work culture. Not only is culture important, but AI must align with your accounting firm’s business goals. AI should not be adopted for its own sake but with clear objectives like improving efficiency, enhancing client service, and driving growth.

Accountants Behaving Badly

Marshall woman accused of bilking family company and spending money at casino [Minnesota Star Tribune]
The former accountant of a family construction company skimmed more than $95,000 from the business and spent it on gift cards, a Spotify subscription and trips to casinos among other things, county prosecutors said. Rikki Lee Kor, 49, of Marshall was charged with 24 felony counts of fraud in connection with the alleged embezzling that spanned about a year until this summer.

Education

UVM $15M Gift from Grossman Family Foundation to Launch Undergraduate Business Co-op Program [University of Vermont]
A $15-million gift to the University of Vermont’s (UVM) Grossman School of Business will create the university’s largest experiential Co-op program, providing students with real-world experiences working in leading companies to better prepare UVM Catamounts for impactful careers and leadership in business and entrepreneurship. The new undergraduate Co-op program will enhance experiential opportunities for students in the school’s four concentrations (accounting, finance, marketing, business analytics) and themes (entrepreneurship, sustainable business, and global business). More immersive than a typical internship, a Co-op is a rigorous academic experience through which students alternate between classroom education and full-time employment, gaining practical, hands-on experience in their field of study as part of their undergraduate degree. Working in a partner company for a full semester, students apply their classroom knowledge to meaningful, real-world business situations.

The post Friday Footnotes: Private Equity DGAF; Controllers Reflect on Their Future Skill Set; PCAOB Does Something | 9.27.24 appeared first on Going Concern.

According to The Real Deal, Weaver (#31 IPA 100, $328,276,610 in revenue) is taking 36,500 square feet at the Penn 1 building in Midtown. The move comes after they merged with Buchbinder Tunick & Company who already had 8,000 square feet at the tower. A source tells TRD asking rent for the entire 28th floor was $105 per square foot and the lease duration is 11 years.

Side note: we had no idea Weaver’s website was so pretty. Props to their web developer.

Says Penn 1 owner Vornado Realty Trust of the building:

Punctuating the Manhattan skyline, PENN 1 is a Class-A, 55-story tower of over 2.5 million square feet, providing breathtaking 360-degree views of the entire city and direct access to Penn Station and Moynihan Train Hall.

PENN 1 has undergone a major transformation with a focus on providing a first-class hospitality experience to its tenants. The result of this redevelopment is a sleek, modern building that seamlessly blends state-of-the-art technology with luxurious amenities to create an unparalleled tenant experience.

Weaver MP John Mackel told TRD the proximity to Penn Station was a big draw. “At Weaver, we are dedicated to our people-centric culture that puts our team members in the best position to collaborate, innovate and serve our clients well,” he said in a news release. “The redeveloped PENN 1, which sits atop North America’s most accessible transit hub and features unparalleled in-building and neighborhood amenities, proved to be an ideal spot to consolidate our New York City team.”

And they have on-site pickleball courts!

The post Weaver’s Upgrading to a Whole Floor in NYC appeared first on Going Concern.

That IRS press release, for your reading pleasure:

IRS moves forward with Employee Retention Credit claims: Agency accelerates work on complex credit as more payments move into processing; vigilance, monitoring continues on potentially improper claims

The ERC program began as an effort to help businesses during the pandemic, but as time went on the program increasingly became the target of aggressive marketing – and potentially predatory in some cases – well after the pandemic ended. Some promoter groups called the credit by another name, such as a grant, business stimulus payment, government relief or other names besides ERC or the Employee Retention Tax Credit (ERTC).

To counter the flood of claims, the IRS announced last fall a moratorium on processing claims submitted after Sept. 14, 2023, to give the agency time to digitize information on the large study group of ERC claims, which are made on amended paper tax returns. The subsequent analysis of the results during this period helped the IRS evaluate next steps, providing the agency valuable information to improve the accuracy of ERC claims processing going forward.

The detailed review during the moratorium allowed the IRS to move into this new stage of the program with more payments and disallowances. In addition, the IRS will remain in close contact with the tax professional community to help navigate through the complex landscape.

While this might be good news for the few business owners who’ve been waiting a long time for their legitimate ERC claims to go through, apparently some senators weren’t so happy to hear this.

U.S. Senators Mitt Romney (R-UT), Thom Tillis (R-NC), and Joe Manchin (I-WV) said on September 19 they’ve introduced the Employee Retention Tax Credit Repeal Act, bipartisan legislation that would disallow the processing of Employee Retention Tax Credit (ERTC) claims filed after January 31, 2024 and increase penalties on fraud.

In the IRS’ own words, ERC has been rife with fraud and abuse, hence the moratorium they placed on processing of new ERC claims last year. Employee Retention Credits made the yearly Dirty Dozen list of tax scams two years in a row.

Said the senators in their news release:

The ERTC has been highly susceptible to fraudulent schemes—costing taxpayers nearly 200% more than anticipated and adding an estimated $230 billion to the national debt through Fiscal Year 2023. By eliminating the ERTC, the senators’ bill would save taxpayers an estimated $79 billion over 10 years.

“In a rare moment of widespread agreement in Washington, almost all members of Congress agree that we should eliminate the ERTC—which has been pervaded by fraud and cost nearly 200% more than originally projected,” said Senator Romney. “Stealing from the government is stealing from hardworking taxpayers. Instead of repurposing ERTC funds for future spending programs, we should eliminate this plagued credit now to lower our national debt.”

“Repealing the ERTC is a critical step towards addressing America’s debt crisis,” said Senator Tillis. “It’s past time to eliminate this fraud-ridden pandemic-era policy so we can concentrate on getting our fiscal house in order.”

Estimates suggest the ERC credit has added $230 billion to the deficit through FY2023 and could eventually cost up to $550 billion.

“Congress established the ERTC during the onset of the COVID-19 pandemic to encourage businesses to retain employees during such unprecedented circumstances. As President Biden formally ended the COVID-19 Public Health Emergency in May 2023, it’s time for the IRS to move on, too. I’m proud to join the bipartisan ERTC Repeal Act, which would end the ERTC for claims submitted after January 31, 2024—cutting down on the staggering and unexpected costs of this program—and would enhance anti-fraud measures for claims still being processed,” said Senator Manchin.

Over the summer, the IRS The IRS spent months digitizing information and analyzing data for more than one million ERC backlogged claims, the total of which was more than $86 billion. Through this analysis, the agency determined 10-20% of claims were low-risk, 60-70% of claims had unacceptable risk, and 10-20% had high risk. Meaning only about 10-20% of these million ERC claims were most likely legitimate and met the requirements to claim the credit.

As of August, he IRS has sent out 28,000 disallowance letters to businesses whose claims showed a high risk of being incorrect, disallowances that will prevent up to $5 billion in improper payments according to IRS estimates. Thousands of audits are underway, and 460 criminal cases have been initiated. The IRS has moved 50,000 low-risk ERC claims into the pipeline for payment processing in coming weeks.

Text of the Employee Retention Tax Credit Repeal Act can be found here [PDF].

Romney, Tillis, Manchin Introduce Bipartisan Legislation to Repeal COVID-Era Tax Credit Riddled with Fraud [Senator Mitt Romney]

The post Senators Want to Nuke the ‘Fraud-Ridden’ Employee Retention Credit For Good appeared first on Going Concern.

Giuliani did not in fact give his immediate attention to the matter and the demand letters continued for five years at which point the firm decided to take him to court for just $10,000. The total bill was $50,833 of which Giuliani owed $36,125 so it was a third of what they were owed but something is better than nothing we suppose. $10,000 is peanuts compared to his next attempt at avoiding a firm’s bill.

In an unexpected development, Giuliani told bankruptcy court in May that he was unable to find an accounting firm willing to work with him on his case. Wrote The Guardian:

“Nobody seems interested” in helping Rudy Giuliani meet accounting obligations in his ongoing bankruptcy case, lawyers for the former New York mayor, presidential hopeful and Trump attorney said in a court filing on Tuesday.

“Unfortunately, the debtor originally had an accountant who was helping,” the filing said. “However, he had a change of heart and indicated that he no longer wished to help prepare the monthly operating reports.

“The debtor advised that he has reached out to a number of accounting firms and CPAs seeking their help, however, no one seems interested in taking the assignment.”

Gee, can’t imagine why.

He did find someone to help with the bankruptcy accounting eventually, a firm called Global Data Risk. Says GDR on their website of their expertise and the weapons in their robust toolkit:

Independance [sic], Objectivity and Efficiency.

Global Data Risk (GDR), is a premier financial advisor to bankruptcy committees, trustees, and other stakeholders navigating the intricate landscape of financial restructuring and asset recovery. Our expertise is in managing the complexities of asset tracing and value recovery across both the United States and foreign jurisdictions including emerging markets where the rules based order is uncertain. We tackle some of the most high-profile and challenging cases with precision and authority.

GDR distinguishes itself in the industry through a unique approach that combines the diverse skills and extensive experience of our multidisciplinary team. Our team comprises forensic accountants, business experts, complex financial instrument managers, bankers, lawyers, investigators, technologists, and former intelligence officers. This blend of expertise allows us to offer exceptional guidance and support in a variety of critical areas including restructuring, debtor issues, hard asset tracing, and the increasingly important domain of crypto and emerging technology asset tracing.

Surely those services come cheap.

You’ll never guess what happened next! Global Data Risk demanded $324,843.75 for 1,181.25 hours of services — love the 15 minute increment, guys — plus $6,854.29 in expenses for a total of $331,698.04. And they did this in court in August because, guess what, America’s mayor hadn’t paid.

“Even after dismissal of his bankruptcy case, the Debtor has launched another baseless and bad faith crusade in this Court, this time in opposition to GDR’s Application for final fees and expenses,” said GDR in a court filing. “It is disappointing, but unsurprising, given the tenor of the case prior to dismissal: after seven and a half months in bankruptcy—all of which were characterized by the Debtor’s delay, obfuscation and attempts to reap the rewards of bankruptcy without adhering to its burdens—the Debtor abruptly reversed course and obtained dismissal of his chapter 11 case in the name of avoiding the looming potential appointment of a chapter 11 trustee.”

“As has been repeated by the case parties ad nauseum, the Debtor chose to file for chapter 11, and he consequently must bear the burdens of what such a filing entailed.”

In August, Giuliani requested the bankruptcy court reduce the GDR bill by almost half, saying he was overbilled and accusing the company of “duplicative time entries” and other excessive billing. GDR claimed Giuliani had received “an incredible deal.” You all can do the math on 1,181.25 hours of billable work for a cost of $324,843.75.

The court wasn’t buying it and this week Judge Sean Lane, United States Bankruptcy Judge for the Southern District of New York, handed GDR a win.

CNN:

Former New York City Mayor and Donald Trump lawyer Rudy Giuliani has been told he must pay a bill of about $300,000 for a forensic accounting firm’s work to trace his money in his now-aborted bankruptcy proceeding.

The dispute over how much Giuliani owes to the accounting firm Global Data Risk was the last vestige of his efforts earlier this year to hold off creditors, to whom he is nearly $150 million in debt.

Giuliani had argued to the judge, Sean Lane of the U.S. Bankruptcy Court in White Plains, New York, that the fees of the accounting firm such as billing for meetings, travel and interview time as they researched his assets for the creditors should be reduced.

But Lane is giving the accounting firm nearly all it sought.

“There was an alarming and inappropriate lack of financial transparency by the debtor … which led to the need for this work,” Lane said at a court hearing on Tuesday.

Giuliani’s bankruptcy case was dismissed in July. Best of luck to GDR on extracting that blood from this particular turnip.

The post Rudy Giuliani Tried Really Hard to Stiff a Firm for Forensic Services Rendered appeared first on Going Concern.

While we await EY revenue numbers that should drop some time next month, sources inside EY are running to The Times to say partners are being warned of a second year of pay cuts ahead.

Partner pay at EY is set to fall for the second year in a row while senior staff will forgo a pay rise, in a sign that professional services firms are still battling a downturn.

Benoit Laclau, the firm’s managing partner who runs the consulting division for UK and Ireland, told senior managers and directors on a call last week that average partner pay would be down this year, according to EY sources.

But we already knew the partners have been warned, stories about it came out back in April. Prior to the end of EY’s fiscal year on June 30, EY UK & Ireland Managing Partner, Finance and Transformation, Stuart Gregory gave a presentation to the partners letting them know partner profit could drop as much as 15 percent this year. Based on prior year partner payouts, a 15 percent drop would be somewhere in the neighborhood of £646k ($865k USD), putting them only slightly above 2020’s low of £667k.

2023 was the first time EY UK partner profits had taken a hit since all that stuff happened with a certain virus we don’t talk about anymore. Partner pay at EY UK so far for this decade:

• 2024: ?
• 2023: £761,000
• 2022: £803,000
• 2021: £749,000
• 2020: £667,000
• 2019: £679,000

Earlier this month it was reported that many service lines at EY UK received pay cuts for raises this year.

The post EY UK Partners Warned Again Pay Will Suck This Year appeared first on Going Concern.

This bit though:

83 percent of the 1,345 CEOs surveyed expect a full return to office over the next three years, up from 64 percent in 2023. That number increases to 87 percent for CEOs in the 60-69 age group because boomers are actually the worst.

Male CEOs are more gung ho (the spellcheck wants to correct this to “bunghole” and honestly…) on a full return to office compared to their female counterparts: 84 percent of them expect a full return to office within three years while 78 percent of female CEOs feel the same.

Guess the era of the employees having all the power is gone, or at least that’s what CEOs think. Was nice while it lasted.

The post CEOs Surveyed By KPMG Feel a Full Return to Office is Imminent appeared first on Going Concern.

ICYMI: the weekend discussion was about firms acting like assholes and making it that much more difficult to seduce the next generation of accountants to the profession. Shocking. The words “circling the drain” come to mind. Go weigh in if you like.

Jack Castonguay, who used to be a favorite follow of ours on Twitter before he dipped out from the platform in protest, has written about FTX for CoinDesk:

In situations like this, it’s always easy to play Monday morning quarterback and say this could have happened to any auditor and any client. But here, the failure was idiosyncratic. Prager Metis’ audit failed, and it failed because they didn’t mean the minimum standard for due professional care. And there were signs aplenty. FTX apparently kept its accounting record in Slack channels, personal messages, and QuickBooks. QuickBooks is a fine tool if you are a small business owner just starting out. It’s an unacceptable tool for a complex currency exchange worth billions and should have set off alarm bells for the auditor. Yet it didn’t. Maintaining records in Slack should have raised red flags. Yet it didn’t. The billions in cash transferred between FTX and Alameda should have raised red flags and led the auditor to investigate the relationship further. And yet it didn’t.

These aren’t complex misunderstandings in gray areas. They are clearly identifiable risks Prager Metis should have identified, responded to, and sought more evidence about to ensure the risk of a misstatement were lowered to a reasonable level. Prager Metis, as charged by the SEC, didn’t apply the appropriate level of skepticism to respond to the risks in large part because they seemed to lack the understanding or have the technical knowledge on crypto clients necessary to meet auditing standards.

The SEC’s actions should be warning signs to accounting firms regardless of their involvement in the cryptocurrency or blockchain industry.

Last week:

Kelly Phillips Erb explains in Forbes why private equity is so interested in accounting firms and what accounting firms are getting out of the deal. There’s a nice little chart of firms that have taken or are considering private equity investment:

Ah, I’d been wondering if CRI inked a deal yet. Guess not. Um, they missed BDO no?

Meanwhile, FT published this opinion piece:

Private equity roll-ups of accounting firms could run into trouble

Another worry, noted by regulators, is that private equity ownership could damage audit quality. Maria Nykyforovych, an assistant professor at George Mason University, says the short-term investment objectives of private equity investors could create damaging incentives. Even though regulators require audit businesses to be controlled by auditors, there might be scope for private equity investors to influence the audit practice through interlocked boards or management service fees.

There is also uncertainty over investors’ end game given the difficulties of initial public offerings and trade sales. Private equity, which mostly began investing in 2021, has barely tested the exit routes. Ownership could end up with pension funds, family offices or even return to the partners.

For now, the most likely outcome seems to be a sale to other private equity firms.

And here’s an editorial from Chicago Tribune with no author credited. They inexplicably used a picture of an ERC call center for the article image. There’s really nothing new here, down to the several paragraphs dedicated to talking about Arthur Andersen.

Editorial: Not every finance major can be an investment banker. We need more accountants.

America’s most famously boring profession is in trouble, and that’s bad news for Chicago.

The city is a hotbed of professional services, including lawyers, consultants and the now-endangered species of certified public accountants. CPAs are essential for financial reporting, advanced tax preparation and other dull-but-important tasks that keep the economy going.

…

Yet another challenge is that these days one of the big trends in the accounting world is the interest of private equity firms in grabbing a piece of the business. For generations, accounting firms mainly have been partnerships, governed in ways similar to law firms and other partner-dominated fields. Private equity is becoming a primary means for retiring senior partners to cash out their stakes. How the influx of these outside owners changes the profession remains to be seen. But CPAs will need to push back against any reputation-damaging schemes from their new overseers to boost revenues, a la Andersen.

Consulting, investment banking and other high-paying finance and tech jobs are still competing for the same up-and-coming number crunchers who used to pursue accountancy. Many of these math-savvy young adults see no reason to invest so much time and money into becoming a CPA.

---

PwC is abandoning a $140 million project to build a brainwashing compound in China because of all that Evergrande stuff.

The ambitious project, located at Haitang Bay in the southern island province of Hainan, was intended to be a training facility for “building trust in leadership,” but recent regulatory action has forced the firm to suspend work on the site.

Designed by the architectural firm Gensler, the Reimagine Park campus spanned 16 acres and was set to be a zero-carbon facility comprising nine buildings connected by autonomous electric shuttles. The facility was planned to host the firm’s Trust Leadership Institute in Asia Pacific and aimed to be a symbol of sustainable and innovative leadership in the region.

The project, part-financed by the local municipality, began construction last year and was expected to be completed towards the end of this year.

The government of India is investigating the sudden death of an overworked young woman working for EY:

Minister of State for Labour Shobha Karandlaje has now announced that the government will be investigating the case, stating that justice must be served and employee safety guaranteed. This move follows widespread criticism, with social media igniting discussions about the “toxic work culture” prevalent in large firms like EY, which is one of the four largest and reputable accounting and consulting firms in the world.

Earlier:

We have a couple updates to the above story I’ll get published ASAP.

Meanwhile, across the pond…EY partner pay is going to be disappointing again this year. Smithers, fetch the violins!

Partner pay at EY is set to fall for the second year in a row while senior staff will forgo a pay rise, in a sign that professional services firms are still battling a downturn.

Benoit Laclau, the firm’s managing partner who runs the consulting division for UK and Ireland, told senior managers and directors on a call last week that average partner pay would be down this year, according to EY sources.

The Big Four giant, which provides auditing, consulting, tax and other professional services, also told staff across several of its divisions last week that they would not be receiving a salary increase, which many have come to expect in recent years. Among the staff told that they would not be getting a pay increase were several senior managers and directors, who are below EY’s hallowed partner ranks, in the company’s consulting division.

Have they paid off that $500 million Project Everest hole yet?

According to a recent KPMG report, a majority of CEOs think hybrid work will be dead within the next three years. It was fun while it lasted I guess.

A majority (83%) of CEOs surveyed globally predict that companies will shift to require a “full” return of employees to in-office work in the next three years, an increase from 64% the prior year, KPMG said, reporting on the findings of a survey of 1,300 chief executives conducted in July and August.

The report also revealed a generational divide in the executives’ sentiment on the back-to-the-office matter: 87% of CEOs aged 60-69 predicted a full return to office, 83% of those aged 50-59 expect the shift back to the office to happen while only 75% of chief executives aged 40-49 did so, according to the report. Meanwhile more male CEOs (84%) bet on the full return to office scenario compared to 78% of top female executives.

“This year’s findings reveal that CEOs are hardening their stance on returning to pre-pandemic ways of working,” KPMG said.

In other KPMG news, firearm manufacturer Smith & Wesson has a new auditor:

Smith & Wesson Brands, Inc. (NASDAQ:SWBI), a leader in firearm manufacturing, has announced the appointment of KPMG LLP as its new independent registered public accounting firm, effective September 17, 2024. This change comes as part of a competitive auditor selection process conducted by the company’s Audit Committee, which involved several notable accounting firms.

The decision to engage KPMG was based on a comprehensive evaluation of each firm’s capabilities, responsiveness, and fee structures. Notably, this change does not reflect any dissatisfaction with services provided by the previous auditor, Deloitte & Touche LLP, which had served Smith & Wesson since 2014.

Surely that’s plenty of news for the first Monday of fall?

Please let me know if you spot something interesting, have a tip, or watched a good TikTok cat video (my job gets boring) via email, text, or on Twitter. Text is best, my inbox is cursed with hundreds of emails about the top ten cities in which to eat hot dogs and other such public relations trash.

Have a good week, you.

The post Monday Morning Accounting News Brief: What Could Go Wrong with PE; PwC Abandons a Big Project | 9.23.24 appeared first on Going Concern.

Big 4

Big Four Accounting Firms Ebb as Feeder for Corporate CFO Jobs [Bloomberg Tax]
Long-term recruiting trends show top accounting and consulting firms are slipping as a dominant contributor to the talent pipeline for chief financial officers at big publicly traded companies, though they remain a common launching point. About one-quarter of CFOs at large US-listed companies in the S&P 500 index bring past work experience at PricewaterhouseCoopers and its Big Four firm peers Ernst & Young, Deloitte, and KPMG. Add in other common firms where CFOs have previously worked—such as McKinsey & Co. and Boston Consulting Group—and that figure rises to one-third with an accounting or consulting background. That’s according to an analysis of Bloomberg data on company management profiles, LinkedIn profiles, and corporate leadership biographies.

Earlier: Mother Pens Letter Calling Out EY After Her Overworked Daughter Suddenly Passed Away at 26

Deloitte Forms Committee To Review Employee Practices Amid EY Work Pressure Controversy [NDTV]
Amid a social media storm over the death of a young employee at tax consultancy major EY allegedly due to work pressure, Deloitte has formed a three-member external committee, which includes former revenue secretary Tarun Bajaj, to look into practices, policies and processes concerning employees, its South Asia CEO Romal Shetty said on Friday. Shetty said to manage the work pressure within the organization.

LSBF, Deloitte to create upskilling programmes [International Accounting Bulletin]
The London School of Business and Finance (LSBF) Singapore Campus has partnered with Deloitte to co-develop a suite of upskilling programmes for junior to mid-level professionals in the finance and accounting sectors.

Take a risk? CFOs say now is not a good time [Axios]
Here’s a stunning stat: Only 12% of chief financial officers say that now is a good time to take greater risks, according to a Deloitte survey out Wednesday morning. Why it matters: This could be an indicator of an economic slowdown to come.

PwC looks for way forward in increasingly difficult China terrain [Bamboo Works]
The PwC case also shows how multinationals are coming increasingly under the microscope on government concerns about their potential to pose national security risks amid growing tensions between China and the U.S. Auditing is especially sensitive since it involves access to extensive market data that Beijing worries could be leaked to foreign governments. To avoid that, it has been urging state-owned enterprises to switch to local auditors from foreign ones like PwC. In this regulatory climate, foreign businesses wishing to stay in China have no choice but to walk a tightrope between keeping both their clients and the government happy. And as the Evergrande case shows, sometimes it’s not easy to do both. That can be problematic for the broader China business of a company like PwC, whose other clients have been jumping ship over concerns about the company’s future.

Talent

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News

Cybersecurity firm flags attack on construction accounting system [Construction Dive]
Ellicott City, Maryland-based cybersecurity firm Huntress has discovered an emerging threat for users of Foundation Software, which bills itself as serving 43,000 construction professionals nationwide. In a Sept. 17 report, Huntress said plumbing, HVAC, concrete and similar subcontractors were actively impacted.
And the company response:
The impacted clients did not follow the protocol of changing their user ID and password, said Mike Ode, Foundation’s CEO, who noted the firm hosts the vast majority of its customers via its software-as-a-service offering. “If you buy a software and you install it at your place, you are responsible for the security and the walls and the perimeter, right?” Ode told Construction Dive. “We’re responsible for what we’ve been selling for the last decade, and that’s a hosted solution.” He urged impacted firms to adopt hosted software instead. “We want everybody in our SaaS-hosted environment, right? Let us do it. Let us take on the responsibility,” Ode said. He asserted the attack mentioned in the report may have impacted just a single client, but acknowledged he didn’t know for certain.

Low bidders bypassed for state contract to probe mystery $1.8B [The Nerve]
A global consulting firm hired by the state [of South Carolina] to investigate the mystery $1.8 billion and related financial questions was not the low bidder for the “potential” $3 million contract, records obtained by The Nerve show. But under state law, procurement officials don’t have to accept the lowest bid but instead can use other purchasing procedures depending on the situation, including issuing a “request for proposals,” which was done by the S.C. Department of Administration in awarding a contract in July to New York-based AlixPartners in connection with the investigation of the $1.8 billion.

People

Ernst & Young names new Denver chief [Denver Business Journal]
The accounting and professional services giant said Andrea Lovelady will take over as Denver office managing partner beginning Oct. 1. Mark Belfance, who held the position since 2016, will retire this year, the company said.

Grant Thornton’s Jessica Knott named one of the Most Influential Women in Business by the San Francisco Business Times [Business Wire]
Jessica Knott, an Audit & Assurance partner at Grant Thornton, has been named one of San Francisco’s “Most Influential Women in Business” by the San Francisco Business Times. Each year, the publication recognizes leaders in the Bay Area for their impact on their industry and the community. “She builds genuine relationships with her clients and colleagues, and her unrivaled tech industry knowledge has allowed her to guide dozens of clients through each evolution of that sector.” Knott is the third consecutive woman from Grant Thornton to receive this award. Melanie Krygier, Grant Thornton’s Private Equity Tax leader, was recognized in 2023; and Rimma Tabakh, Grant Thornton’s market managing principal in San Francisco, received the accolade in 2022.

AI

AI, the infinite intern [Accountancy Today]
So, for the tax and accounting industry, what is the best lens to view genAI through in its current stage? I think it would be helpful for most organisations to think of it as the ‘infinite intern’ – i.e. a round-the-clock resource that is happy to do anything thrown its way, at scale, and has the ability to turn around jobs extremely quickly albeit being prone to frequent errors and therefore requiring close monitoring. When genAI is approached with this mindset, the tasks it is best suited to start to become much more apparent. For instance, while it shouldn’t necessarily be trusted with one-off, high value tasks, it excels at automating routine tasks and reconciling large amounts of data that would otherwise take many hours or even days to get through. Doing so not only slashes the time taken to complete such tasks, but it also frees up tax professionals to focus on strategic activities that are much more valuable to the organisation as a whole.

Live Broadcast: AI and automation in the accounting industry [Accountancy Age]
Tim Baker, CEO of Kloo, and Sean Smith, Accountant Evangelist at Sage, explore the transformative power of AI and automation.

Nisivoccia on AI’s Role in the Changing Landscape of Accounting [New Jersey Business & Industry Association]
On this past weekend’s Minding Your Business on News 12+, Nisivoccia Principal of Client Accounting Services Vicki Kosuda joined host Bob Considine to discuss the upswing of Artificial Intelligence in accounting, and how AI can help improve cash flow planning management for all businesses. Kosuda explained that AI’s ability to rapidly process data will change the nature of how accountants serve their clients. “It’s really going to help the client versus the entering the data, figuring out what happened before, what happened now, compiling the data, to then have those important conversations,” she said.

CFOs juggle strategy, economic pressures in AI push: Billtrust [CFO Dive]
While businesses have rapidly adopted new technologies to improve their customer-facing products and services, back-of-house functions — such as finance — have lagged behind the digitization curve. However, with finance teams under growing pressure to deliver more strategic insights faster, today’s finance chiefs are taking a second look at how they can bring new technologies such as artificial intelligence into spaces like their order-to-cash processes. With finance asked to improve its efficiency, optimize their processes and improve key metrics such as sales outstanding and customer defaults, CFOs recognize “they’re not going to get there by telling people to work harder or throwing more people at it,” Sunil Rajasekar, CEO of accounting software provider Billtrust, said in an interview. “They recognize with the pressures of today, they have to digitize.”

AI driven accounting will replace monthly close by 2030, says research [Verdict]
New research commissioned by global accounting software platform Sage predicts that, by 2030, three quarters of businesses will abandon the accounting practice of the traditional monthly close in preference to AI driven real-time accounting. The research found that 98% of respondents anticipate that AI will improve monthly close accounting efficiency in the next five years, and 54% anticipate an efficiency boost of 20% or more. Some 53% of respondents agreed or strongly agreed that AI would allow them to completely abandon accounting to a monthly close schedule.

Scammers Using AI to Clone Voices, Drain Bank Accounts As Deloitte Forecasts $30,000,000,000 in AI Losses by 2027 [The Daily Hodl]
Cybersecurity expert Thomas Hyslip, who spent two decades in federal law enforcement with the Secret Service and the Department of Defense, says it takes a matter of seconds to create impostor audio. “Historically they had to manually go out and steal credit cards… Now with AI they can take what they already have and use that to enhance their ability to commit fraud… Some of them, you can do [in] as many as 30 seconds. You can clone somebody’s voice and then make phone calls or, you know, use it to try to trick voice recognition. Some of the banks now use voice recognition in place of the phone number.” Big Four accounting firm Deloitte says its base case forecast finds fraud from generative AI will reach $30 billion by 2027, rising from $12.3 billion in 2023.

Meanwhile, in Law

Women Law Professors, Students Across The Country Continue To Receive Creepy Texts From Unidentified 2L [Above the Law]
Back in January, female professors at law schools across the country started receiving strange text messages from an unidentified source who claimed that “law school isn’t fair for us men anymore” because “women always outperform us now.” The next month, as the unsettling messages continued, lamenting how “unfair” it is that “women have clearly won the battle of the sexes,” leaving men as “the losers,” the FBI reportedly began an investigation into the matter. Now, nearly nine months later, the odd text messages are still ongoing, and it’s not just law professors who are receiving them — female law students are, too.

The post Friday Footnotes: Big 4 Isn’t CFO Kindergarten Anymore; Grant Thornton Influences Something; “Completely Brainwashed Slaves” | 9.20.24 appeared first on Going Concern.

There are a large amount of layoffs going on at RSM, specifically in the D365 practices, Risk Cyber Security, and MC (management consulting practices). Meetings were scheduled yesterday via Webex, not MS Teams, which is interesting as the firm uses MS Teams for all communications. Meetings are all day today across these groups.

And followed up later in the day with specifics:

Updates after the meetings today, so far, over 200 staff let go in Audit, 260 let go across consulting, mainly D365 & Dynamics teams, Risk Consulting and Management Consulting.

Webex? Really? What year is this?

Just going to drop this completely unrelated post from July here: Within Three Years, RSM US Will Have Twice as Many People Working for Them in India

Anyone with more info or in need of a virtual shoulder to cry on is welcome to email or text.

The post Layoff Watch ’24: It’s Not TGIF at RSM Today appeared first on Going Concern.

According to INSIDE Public Accounting, ATA will retain majority control and no leadership shakeups are expected. “Through its partnership with Copley Equity, ATA will enhance its talent, technology and internal operations as well as continue its long-term plan of exploring strategic acquisition and growth opportunities,” IPA said. According to ATA’s website, the firm has 25+ partners and 200+ staff in multiple offices across Tennessee, Kentucky, Arkansas, and Mississippi.

“In planning for our future, ATA sought a capital partner who could help the company expand our service offerings, grow into additional markets, and continue to improve our tools and people resources. We are very excited to partner with Copley Equity, which brings a strong track record of supporting the growth of the companies with whom they partner,” said John Whybrew, ATA managing partner at ATA since 2016.

“Combining deep technical expertise with strong community relationships, clients choose to work with ATA year after year,” said Peter Trovato, managing director of Copley Equity. “These attributes have made ATA a leading growth platform in the attractive accounting services market. We are excited to support ATA as it continues to recruit top talent, invests in technology solutions, expands into new geographies and broadens its service offerings.”

“Our investment in ATA is the culmination of a multi-year search for a partner in the accounting services space,” said Sean Sullivan, vice president at Copley Equity. “Among the hundreds of opportunities we reviewed during that process, ATA was a clear standout. We look forward to working with ATA across a range of strategic initiatives in the coming years.”

Copley Equity says it takes an “industry agnostic” approach and focuses on lower middle market companies. Specifically:

• Private companies generating $2 to $25 million in earnings or free-cash flow
• Typically founder owned and operated with strong management
• A stable revenue base often with recurring characteristics

Terms of the deal weren’t disclosed but Copley says on their website they invest $5 to $75 million in equity per transaction so we assume it’s somewhere in that large window. They’ll throw the right company some money for growth capital, owner liquidity, acquisition financing, or debt retirement. It appears this is the first accounting firm in their portfolio.

“Our unique capital base allows us to invest in companies that do not fit the venture capital template and are typically ‘too small’ for traditional middle-market private equity firms,” says the 12-year-old private equity firm. Pitchbook profile here should anyone care to do a deeper dive.

The post A Sub-$41 Million Firm We’ve Never Heard of Has Let Private Equity In appeared first on Going Concern.

“When Anna joined this specific team, she was told that many employees had resigned due to the excessive workload, and the team manager told to her, ‘Anna, you must stick around and change everyone’s opinion about our team.’ My child didn’t realize she would pay for that with her life,” the email said.

A tweet by @kaay_rao — which is where we first saw the letter shared yesterday — has 3.2 million views as of publication time.

Heartbreaking news from EY Pune – a young CA succumbed to the work pressure and nobody from EY even attended her funeral – this is so appalling and nasty!!! pic.twitter.com/pt8ThUKiNR

— Malavika Rao (@kaay_rao) September 17, 2024

Social media reaction and media coverage since the letter dropped yesterday has pushed EY India into issuing a statement. “Anna was a part of the Audit team at S R Batliboi, a member firm of EY Global, in Pune for a brief period of four months, joining the firm on 18 March 2024. That her promising career was cut short in this tragic manner is an irreparable loss for all of us,” EY’s statement said [source: Economic Times]. She passed away on July 20.

“We are taking the family’s correspondence with the utmost seriousness and humility. We place the highest importance on the well-being of all employees and will continue to find ways to improve and provide a healthy workplace for our 100,000 people across EY member firms in India,” they said.

The statement, brusque and hollow even by corporatespeak standards, is not being well-received by the public so far.

EY’s response is a classic lesson on how to say nothing will change without saying nothing will change. pic.twitter.com/HuHIDScGLf

— Lavanya Mohan (@lavsmohan) September 18, 2024

More conversation in @kaay_rao’s replies.

Earlier: Mother Pens Letter Calling Out EY After Her Overworked Daughter Suddenly Passed Away at 26

The post EY Responds to the Viral Letter From Bereaved Mother of a Deceased Auditor, Social Media Calls BS appeared first on Going Concern.

Meanwhile, EY China put out this press release:

EY Greater China Region (EY) joins hands with Yan Chai Hospital and Share for Good for joint charitable initiatives. A group of 25 volunteers took part in visiting and distributing mooncakes, sharing holiday blessings and warmth with more than 800 underprivileged children, seniors and families from multiple beneficiary institutions.

The Mid-Autumn Festival — also called the Moon Festival or Mooncake Festival — is celebrated every year on the 15th day of the 8th month of the Chinese lunar calendar, so sometime in late September or early October on the Gregorian calendar. Here’s a quick explainer from South China Morning Post for the unfamiliar:

The press release continues:

Jasmine Lee, EY Hong Kong and Macau Managing Partner, says: “My heartfelt thanks to the charitable organizations and volunteers for their support on this campaign and their charitable efforts. Their support and facilitation have enabled our series of activities to be held smoothly. Akin to the Mid-Autumn Festival full moon, mooncakes symbolize reunion and harmony, while the society serves as a whole, and we are all a part of it. On top of adding the festivities to the holiday through these activities, allowing everyone to welcome and enjoy the Mid-Autumn Festival, we witnessed the coming together of community resources and strength. More importantly, we hope to continue conveying the message of care and support to the underprivileged, and to encourage the spirit of community and charity, where everyone cares for each other and build a society of inclusivity and kindness.”

The firm has been known to hand out mooncakes to staff this time of year, too.

There, some nice news for once.

The post While PwC Begs Clients Not to Leave, EY Hands Out Cake appeared first on Going Concern.

Wrote SFC:

The deal comes after KPMG in March moved to extend its lease at its current office at 55 Second St., which it has occupied since 2003, on a short-term basis of less than three years. Its future home is located two blocks south, near Salesforce Park.

“Our planned move not only reaffirms our longstanding commitment to the city of San Francisco but also demonstrates our dedication to investing in both our people and capabilities to deliver the most innovative solutions to our clients,” said KPMG’s Chris Cimino, a managing partner in San Francisco, in a statement. “This new building, including nearly 100,000 square feet of space for our teams, will provide a superior in-office experience and foster collaboration and creativity.”

The new office will be 100,000 square feet at 505 Howard St, pictured here on Google Street View:

Look how much cleaner those curbs are at the new spot. We wouldn’t recommend eating off of them — it’s San Francisco after all — but they sure are surprisingly sparkly for downtown.

A spokesperson told the paper the new, smaller space is “consistent with market trends” and “best suited for our people and our clients.”

As far as we know, most of KPMG is operating a roughly 3-day in office hybrid model. The 1,000 people working at KPMG San Francisco will be building neighbors with Intuit, who will be taking possession of about 36,500 square feet in January 2025.

Terms of the lease weren’t disclosed.

Bonus Google reviews of KPMG San Francisco since we happened to be on Google Maps anyway:

KPMG is downsizing its San Francisco office. Here’s where the accounting giant is moving [San Francisco Chronicle]

The post KPMG Is Ditching 38,000 Square Feet in San Francisco appeared first on Going Concern.

The total reported aggregate global revenue (unaudited): $67.2 billion for the fiscal year ending May 31, 2024. That’s a 3.1% increase in local currency (3.6% increase in USD) from FY2023. By comparison, the jump from 2022 to 2023 was a 14.9% increase; revenue growth from 2021 to 2022 was a staggering 19.6%. from Deloitte’s 2022 revenue, not quite as big a jump as the 19.6% increase between 2021 ($50.2 billion) and 2022 ($59.3 billion). It was only a few revenue announcements ago that Deloitte became the first Big 4 firm in history to break $50 billion in global revenue.

• 2024: $67.2 billion
• 2023: $64.9 billion
• 2022: $59.3 billion
• 2021: $50.2 billion
• 2020: $47.6 billion

“In a complex global environment over the past year, Deloitte successfully sustained a growth trajectory while investing heavily in the next generation of capabilities aligned to emerging areas of client demand,” says Joe Ucuzoglu, Deloitte Global CEO. “Our unrivaled breadth of capabilities spanning advanced technologies, sector depth, and expertise in critical business functions, positions Deloitte uniquely to help clients, markets, and society at large maximize the value of tech-driven transformation.”

Scrolling through the press release to figure out what information needs to be passed along to dear reader we got the idea to plug this thing into a word counter. Supposedly it’s “only” 2,718 words. Feels like five times that.

Growth — or shrink — by service line (in local currency):

• Tax & Legal: 8.7%
• Audit and Assurance: 4.1%
• Risk Advisory: 3.2%
• Consulting: 1.9% (ouch)
• Financial Advisory: -3.8% (double ouch)

There’s nothing else of value in this press release unless you enjoy the text version of those obscure videos of some guy trying to get his mouth around his own junk.

PwC or EY should be next to report revenue results, we’re going to guess it’s PwC since they just kicked off a round of layoffs.

Deloitte reports FY2024 revenue [Deloitte]

The post Deloitte’s Bringing a Small D to Revenue Season This Year appeared first on Going Concern.

Can someone help me come up with a Vault-Tec joke for this story? Because I know it’s right there.

"As it stands today, Deloitte is not known as a shipbuilder, nor is it clear it could meaningfully contribute to the construction of submarines."https://t.co/5uB3rr3nFr

— Going Concern (@going_concern) September 14, 2024

Speaking of Deloitte, the UK business is finally entering the modern age and extending equal family leave to dads:

Deloitte is to equalise its maternity and paternity leave allowance in a move that it hopes will help to boost the number of women in its senior ranks.

From the start of next year, new fathers who work at the accounting and consulting group will get 26 weeks of fully paid leave, the same as new mothers. At present fathers can take only four weeks off with full pay after the birth of their child.

“The evidence is clear about the impact of unequal parental leave on working mothers’ career progression,” Jackie Henry, Deloitte’s managing partner for people and purpose, said. “We know that key moment of the birth of a child sets expectations and an allocation of responsibilities for the future, and traditionally that has fallen to the mother.”

Anyone else kinda shocked this wasn’t the policy already? Get with the times, Deloitte.

Financial Review puts a former EY partner’s business on blast, much to his chagrin:

A former EY partner who allegedly took $700,000 in secret commissions while setting up illegal tax schemes for wealthy clients can be named as Peter White, after he lost a long court battle to keep his identity a secret.

The Commissioner of Taxation is suing Mr White in the Federal Court, alleging he promoted three illegal tax schemes to seven clients in the five years to April 2021, according to a claim lodged in August last year.

Mr White fought for more than a year to stop The Australian Financial Review naming him. He lost two attempts to keep his name suppressed but appealed both times. Last week, he gave up his right to a third bid and suppression was lifted on Monday morning.

The former big four firm partner identified companies that had significant tax losses, then ran his client’s profits through those companies to wipe out large chunks of tax payable, the Tax Office alleges. The structure is called a tax access loss scheme. Mr White is fighting the case.

LOL @ this Bigfoot in the wild pic they included in the article.

And another piece: EY partner sued by ATO was Bill Papas’ former adviser

White was ousted from EY in 2022.

PwC China sent a memo to its people after the news broke last week they’d be receiving the worst fine a Big 4 firm has ever gotten in China:

PwC is making “tangible investments” to ensure the Big Four firm has high quality and sustainable business in China, it said in a memo to staff after Chinese regulators on Friday hit the company’s mainland unit with a record penalty.

“We want to recognise that this has been an extremely challenging period for all of you,” said the PwC internal memo issued late on Friday after the regulatory penalty announcement, and reviewed by Reuters.

“The PwC network has also shown continued support for our China firm throughout this period … They are making tangible investments to ensure we have long term, high quality and sustainable business in China,” it said.

“I know that the coming weeks will not be easy as we put in place a detailed remediation plan and begin to position the business for future success,” the firm’s new China territory head, Hemione Hudson, said in the memo.

And in a related story, more clients started bailing after the fine came down on Friday:

PricewaterhouseCoopers lost five fund clients in a day, mainland media outlet The Paper reported, after Chinese regulators hit its mainland unit with a six-month suspension and a record fine over the firm’s audit of failed property developer China Evergrande.

“Such a severe penalty will have a major impact on the confidence of PwC’s remaining domestic clients,” said Pingyang Gao, an accounting and law professor at HKU Business School. “It is very likely that there will be a mass exodus. So it will likely spell doom for PwC’s business in China.”

Earlier:

• Layoff Watch ’24: Things Aren’t Looking Good at PwC China [UPDATED]
• China Puts PwC in the Punishment Corner For Six Months and Confiscates ‘Illegal Gains’

Private equity across the pond is hoping to unload an accounting business for $660 million:

The private equity owner of Evelyn Partners is preparing to split up the wealth manager by selling off its professional services arm, as it looks to cash in on a wave of investor interest in the sector.

Permira, the buyout giant, is hoping to fetch more than £500 million by selling the division, which includes the business once known as Smith & Williamson. It provides professional services including accounting and tax advice.

Permira is rumored to be one of the suitors interested in purchasing a stake in Grant Thornton’s UK operations.

The Times teased this in July:

The private equity owner of Evelyn Partners, one of Britain’s largest wealth management companies, is exploring options to sell down its £1.5 billion stake.

Permira is sounding out advisers to sell its majority stake in the business, whose activities also cover professional services from auditing and tax advice to insolvency, as it looks to cash in on a wave of investor interest in the sector.

A deal could take the form of an outright sale or a break-up, with Evelyn’s accountancy business likely to appeal to other private equity buyers given the current strong interest in the sector.

KPMG is moving to a smaller office in San Francisco. The Chronicle writes:

Accounting giant KPMG has committed to a new, 100,000-square-foot office in San Francisco once its current lease for its longtime home on Second Street expires.

The New York-based company announced Friday that it will relocate to 505 Howard St., a 10-story building in the South Financial District known as Foundry Square III, in September 2026. A spokesperson described its new lease as “long-term.”

The deal comes after KPMG in March moved to extend its lease at its current office at 55 Second St., which it has occupied since 2003, on a short-term basis of less than three years. Its future home is located two blocks south, near Salesforce Park.

“Our planned move not only reaffirms our longstanding commitment to the city of San Francisco but also demonstrates our dedication to investing in both our people and capabilities to deliver the most innovative solutions to our clients,” said KPMG’s Chris Cimino, a managing partner in San Francisco, in a statement. “This new building, including nearly 100,000 square feet of space for our teams, will provide a superior in-office experience and foster collaboration and creativity.”

The new office will be almost 40,000 square feet smaller than the one on Second St.

FTX founder Sam Bankman-Fried, who was sentenced to 25 years in prison and ordered to forfeit $11 billion on March 28 of this year, is appealing. Well, his lawyers are:

The lawyers filed papers with the 2nd U.S. Circuit Court of Appeals asking a three-judge panel to reverse Bankman-Fried’s conviction and assign the case to a new judge for a retrial, saying the trial judge “imposed a draconian quarter-century sentence on this first-time, non-violent offender” after they contend he hurried the jury into reaching a one-day verdict to cap off a complex four-week trial.

“Sam Bankman-Fried was never presumed innocent. He was presumed guilty — before he was even charged. He was presumed guilty by the media. He was presumed guilty by the FTX debtor estate and its lawyers. He was presumed guilty by federal prosecutors eager for quick headlines. And he was presumed guilty by the judge who presided over his trial,” the lawyers wrote.

Hartford Business spoke a few bigwigs at Connecticut firms to hear how smaller firms can keep their souls amidst the current wave of private equity investment and merger mania. This is to Drew Andrews, managing partner and CEO of Whittlesey in Hartford:

Firms must embrace new technology that will increase efficiency and workflow, he said, including automation and artificial intelligence, which is already being used in the industry.

“We have to automate processes and stay ahead of technological advancements,” Andrews said. “I’m not just looking at what’s coming down the line next year, I’m looking at 10 years down the road. The firms that don’t modernize will become obsolete.”

Firms would be wise to seek the input of more junior employees on technological advancements.

“The younger generation often has valuable insights into using technology more effectively,” Andrews said.

And that’s the news! Email, text, or tweet if you come across an interesting story or just want to chat. My virtual inbox is always open…because someone keeps forgetting to close the door and any old riff-raff can just wander in.

The post Monday Morning Accounting News Brief: What Could Go Wrong Giving Nuke Power to Deloitte; KPMG SF is Moving | 9.16.24 appeared first on Going Concern.

This Week in PCAOB Paper-Pushing

US SEC approves new audit quality benchmarks over Republican objections [Reuters]
Wall Street’s top regulator on Monday gave the nod to new accounting standards set by a watchdog agency, part of an effort to address concerns about the prevalence of poor quality audits. The five-person U.S. Securities and Exchange Commission voted 3-2, with Republican members objecting to what they said was a hasty drafting process and unnecessary burdens likely to fall on smaller audit firms.

SEC as EQCF: Statement on Public Company Accounting Oversight Board; Notice of Filing of Proposed Rules on a Firm’s System of Quality Control and Related Amendments to PCAOB Standards [Statement by SEC Commissioner Hester Peirce]
Auditors play a critical role in maintaining healthy capital markets. Comprehensive, dynamic quality control systems help audit firms fulfill their mission. Troublingly high audit deficiency rates, though likely attributable to multiple causes, suggest that the five-year-long effort by the Public Company Accounting Oversight Board (“PCAOB” or “Board”) to revamp its outdated quality control standards was warranted.[1] Getting the quality control standard right, however, would have required more time for additional pointed questions, comment, reflection, and revision. The PCAOB, now with the Commission’s assent, cut the process short and put out QC 1000, a standard that still needs work. Accordingly, I am unable to support it. Ironically, with respect to a standard that focuses on quality control, the Commission has failed to perform the external quality control function which Congress entrusted to us.

‘Surreal’ venue fight erupts in constitutional challenge to accounting oversight board [Reuters]
For the third time in the last several months, a conservative U.S. appeals court is being asked to reclaim its authority over a lawsuit against a federal regulator after the case was transferred to Washington, D.C. On Thursday, an anonymous Texas accounting firm filed a petition [PDF] at the 5th U.S. Circuit Court of Appeals, arguing that a Houston federal judge wrongly transferred its lawsuit alleging that the Public Company Accounting Oversight Board wields unconstitutional power. The plaintiff, identified in the litigation only as John Doe Corporation, contends that when U.S. District Judge Lee Rosenthal of Houston transferred its case to Washington, D.C., she disregarded a standing order in her district that requires judges to give plaintiffs 21 days to appeal before shifting their cases to courts outside of the 5th Circuit.

Technology

How AI Can Guide Introverts to Success in Professional Services [Kiplinger]
The takeaway here is to be as introverted as possible if you want to sabotage your firm’s private equity schemes.
Artificial Intelligence, or AI, might be able to help introverts sell with less social discomfort and higher effectiveness, offering help for a challenge many accounting and law firm partners suffer with. While the professional services industry remains highly fragmented — one of the telltale signs private equity investors generally look for — the growth model is dependent on a very few rainmakers at any given firm. That means growing revenue is potentially difficult, unpredictable and slow to change.

Machine learning technique predicts likely accounting fraud across supply chains [EurekAlert!]
As the perpetrators of accounting fraud become ever more sophisticated in their techniques, fraud detection needs to step up its game. Thankfully, a group of researchers have devised a new machine learning ‘detective’ that is able to analyze not just fraud at a single firm, but predict likely fraud across whole supply chains and industries. A paper describing the team’s approach was published in the journal Big Data Mining and Analytics on August 28.

Pipeline

Accounting pipeline crisis presents opportunity [Spokane Journal of Business]
Elvis Presley is credited for once stating “I have no use for bodyguards, but I have very specific use for two highly trained certified public accountants.” Today, CPAs enjoy a collective reputation as trustworthy and respected professionals, in part due to the number of regulatory agencies that oversee their work—Securities and Exchange Commission, IRS, National Association of State Boards of Accountancy, Public Company Accounting Oversight Board, and more. Continuing education also is required to maintain CPA licenses. CPAs possess technical knowledge relied upon by stakeholders throughout the business world.

Talent

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Big 4

PwC spin-off Vialto to restructure $1.5 bln debt after cost overruns, FT reports [Reuters]
Global tax and immigration consultancy firm Vialto, which used to be part of PwC, is planning to restructure $1.5 billion of debt loaded onto the business in a private equity buyout after running into financial difficulty following its separation from the Big Four firm, the Financial Times reported on Friday. PwC sold its global mobility business to U.S. private equity firm Clayton, Dubilier & Rice in 2022 in a $2.2 billion deal to raise capital to invest in faster-growing areas of its consulting business, the report said. The firm was renamed to Vialto after the buyout, it added.

Major accountancy firm says don’t blame Airbnb [The Negotiator]
A report from accountancy firm EY has claimed there is ‘little to no relationship’ between the explosion in holiday lets in the UK and the current housing crisis. The firm has said that Airbnb had instead added £5.7bn to the country’s economy in 2023 and that any Labour crack-down on holiday lets would be likely to damage the tourist industry. One of the main means of controlling the growth in holiday lets is allowing councils to double or even triple council tax for them.

LinkedIn user says what we’re all thinking:

pic.twitter.com/AbEqNCE9gm

— Going Concern (@going_concern) September 13, 2024

Related: Deloitte is Out Here Being Cringey on LinkedIn Again

The challenge of LGBTQI+ inclusion at Big Four firms [Phys.org]
The Big Four firms are eager to adopt progressive positions in support of diversity, but it doesn’t always play out in reality for staff. The experiences of LGBTQI+ people working in professional services are still heavily influenced by their clients, according to a new study from the University of Sydney Business School. The research, published in Accounting, Auditing & Accountability Journal, is based on 56 in-depth interviews between 2018 and 2019 with LGBTQI+ staff and allies in Australia across the Big Four firms: Deloitte, EY, KPMG, and PwC. The study was led by Dr. Matthew Egan, a Senior Lecturer in Accounting, Governance and Regulation at the University of Sydney, and explored the experiences of professionals during and following the legislative passing of marriage equality in 2017.

Deloitte brings back face-to-face UK graduate interviews [Financial Times]
Deloitte has reinstated in-person interviews for its UK graduate scheme, amid pressure from the accounting regulator for firms to clamp down on the potential for cheating in virtual assessments. The Big Four firm said it would return to in-person interviews from September for those applying for its graduate and apprenticeship programmes, after switching to a fully online recruitment process during the pandemic. The change comes after the Financial Reporting Council said that Deloitte’s fully online recruitment process posed potential “risks” in its annual review of audit quality at the firm, which was published in July.

Wisdom

Not sure who needs to read this but…

Comment
byu/Zobot08 from discussion
inAccounting

The Department of Defense’s $2.4 Billion “Submarine” Mistake [The Heritage Foundation]
Deloitte’s $2.4 Billion Contract to Build Submarines Shows How Badly Misaligned Defense Spending Has Become: Once again Congress is in the midst of a budget crisis that could again result in a government shutdown. Almost on cue, Defense Secretary Lloyd Austin is expressing grave concern about how a six-month continuing resolution to keep government funded will affect the military. As it stands today, Deloitte is not known as a shipbuilder, nor is it clear it could meaningfully contribute to the construction of submarines. As such, it is insightful that the Navy has been silent on this contract, as the Office of the Secretary of Defense (OSD) inked the deal.

Kansas Athletics and Deloitte Enter into First-of-its-Kind Partnership [University of Kansas]
Kansas Athletics and Deloitte’s US College Athletics practice have entered into a first-of-its-kind collaboration to best position the Jayhawks in navigating the dynamic new world of intercollegiate athletics. Deloitte will work alongside athletics administration and coaches to build upon the department’s objective of being an innovative leader in the industry, provide first-class experiences for student-athletes, and elevate the University of Kansas, the region and the state. Deloitte will examine and evaluate how Kansas Athletics can best be prepared to navigate this transformational time.

Office Space

Accounting Firm Armanino Takes 19K SF at 437 Madison [Commercial Observer]
Armanino signed a 10-year lease for 19,135 square feet on the entire 37th floor of 437 Madison Avenue, according to Sage, which co-owns the building with the Travelers Companies. Asking rent was $105 per square foot.

Placer.ai Office Index: August 2024 Recap [Placer.ai]
In August 2024, office visits nationwide were 68.8% of August 2019 levels – slightly below the post-pandemic office visit recovery level seen in July. Also in August, Miami, New York, Atlanta, and Dallas outperformed the nationwide baseline for year-over-five-year (Yo5Y) office recovery – while Los Angeles and San Francisco lagged behind. Year over year (YoY), Atlanta saw the most impressive office visit growth (7.3%).

Audit

Auditor-Hopping Is Rare, but 13 Small Companies Defy the Trend [Bloomberg Tax]
Companies switch business strategy, headquarters, or even corporate names. What they don’t often change is the outside firm that vets their books. Thirteen public companies prove the exception to this rule. These businesses hired and fired auditors more than seven times apiece in the past decade, according to an analysis of data from Ideagen Audit Analytics. They share similar characteristics: their shares all trade below $1 each and some of them are in emerging industries like cannabis. All but one trades over the counter, meaning they don’t meet the minimum financial thresholds to be listed on major exchanges like Nasdaq or the New York Stock Exchange.

The Future!

AICPA chair: Why change is good, and needed, for the profession [Journal of Accountancy podcast]
Carla McCall, CPA, CGMA, managing partner of the firm AAFCPAs, began her one-year term as AICPA chair in May. In this JofA podcast episode, she said that “whirlwind” was a good description of the first few months in the role, “but in a good way.” “If you truly love what you do, somehow it doesn’t seem so arduous and it goes by real quick,” McCall said, labeling interactions with numerous people in the profession as “rewarding.” In this episode, McCall reflects on what she’s learned about herself, why her firm has benefited from her “front-row seat,” and her message to accountants about doing their part to grow the talent pipeline.

Survey Results Are In: Charting the Future of Accounting [CPA Practice Advisor]
The accounting profession stands at the precipice of transformative change driven by rapid advancements in technology and evolving client expectations. This Canopy and CPA Practice Advisor survey asked respondents to share where they currently were and where they thought their firms would be three to five years from now on topics like automation, AI integration, workforce dynamics, remote work models, client interaction, digital transformation, security and more.

The post Friday Footnotes: Someone Hates the Quality Control Standard; EY Associate Doesn’t Care; Deloitte Doesn’t Build Ships | 9.13.24 appeared first on Going Concern.

The comment:

Comment
byu/Delicious_Chip_6339 from discussion
inAccounting

And there it is:

In a format one can actually read (As noted above, this is in thousands, except share data):

So there you go. Off to go dig around in EDGAR to find more accounting firm/private equity transaction deets, brb.

The post Let’s Look at Apollo’s 10-Q to Get Specifics on Their Deal with BDO appeared first on Going Concern.

On September 10, NASBA received and processed the following scores from the AICPA: pic.twitter.com/fU2fBiPuYN

— NASBA (@NASBA) September 10, 2024

Alright so in this batch of scores for people who sat between July 1 and July 31 we have:

Excluding the international test-takers, that gives us 4,954 discipline scores released in July. We’d say “discipline sections taken” but there are no doubt people who walk out or whose exams get messed up at Prometric so for the purposes of this article, we’re speaking specifically about the number of scores as reported by NASBA.

Going back to the two earlier score releases on June 28 (testing dates: April 20 to May 19):

On June 28, NASBA received and processed the following scores from the AICPA: pic.twitter.com/MCuNsOsKWK

— NASBA (@NASBA) June 28, 2024

And April 24 (testing dates: January 10 to February 6):

On April 24, NASBA received and processed the following scores from the AICPA: pic.twitter.com/WZg939rFs6

— NASBA (@NASBA) April 24, 2024

Adding the number of scores processed in the three score releases of this year gives us this total number of exams taken:

Total domestic discipline sections completed and scored as of July 31, 2024: 9,539

There is one more discipline score release remaining for 2024, due on December 10 for the upcoming testing window of October 1 to October 31. We’ll revise our numbers then.

As always, the mathletes in our audience are encouraged to double-check our math because this author flunked Algebra 2.

The post Doing the Math on CPA Evolution: How Many Discipline Scores Have Been Released So Far This Year? appeared first on Going Concern.

Here’s a fun read from Business Insider: I’m happy I got laid off from Deloitte. The physical and mental toll wasn’t worth the paycheck.

25-year-old former analyst Cierra Desmaratti, who spent a year at Deloitte before she was laid off, says:

I was onboarded at Deloitte’s Chicago headquarters in September 2021 alongside 80 to 90 fresh hires. I remember looking around at my peers dressed in pressed suit jackets and designer pieces and feeling immediately out of place. The T.J. Maxx clothes I wore had been a splurge, but I no longer felt like they were adequate.

I tried making small talk with those around me and quickly realized appearances weren’t the only way I stuck out. Everyone seemed to be bonding over their big-name colleges and Big 4 internships, exchanging anecdotes I simply couldn’t relate to.

…

At one of my first happy hours, I was sitting at a table with colleagues when a senior consultant remarked that intelligent people wouldn’t bother engaging in silly things like crystals and astrology. Taken aback but eager to engage in some playful discourse, I mentioned I considered myself intelligent but also quite intuitive and spiritual. The table fell silent until the senior consultant awkwardly acknowledged my comment and changed the subject.

That moment, though small, reinforced the idea that my success in the workplace was contingent upon my ability to acquiesce to the social norms. I honestly didn’t feel like there was a way to thrive in a more masculine environment without entirely abandoning my femininity, so I tucked away my spiritual, bubbly side.

While I suspect not many readers can relate to the woo anecdote, surely most can relate to this part:

As the busy season ramped up in January, work became all-consuming. I started working 11-hour shifts and immediately felt myself barrelling into burnout.

I didn’t feel safe confiding in anyone about my workload concerns because everyone around me seemed to wear their burnout as a badge of honor. I’d see my boss work long hours and hear colleagues laugh off the stress, saying, “That’s just Deloitte.”

Related to the above tale, Kimberly Tara, Founder & CEO of The Tara CPA Firm LLC in New Orleans, talks to the Cincinnati Business Courier about her early days in public accounting:

After an abrupt switch to accounting from chemical engineering far too late into my college career, I knew I had finally found my calling. What I didn’t realize was how male-dominated the public accounting world still was; but I soon realized why.

In my third busy tax season, I watched a pregnant manager in the tax department FaceTime her child to sleep for the fifth night in a row. That was the moment that I realized public accounting — more specifically making partner in a public accounting firm — was no longer my goal.

Finance teams have just five years to transform or risk becoming irrelevant, according to a new report by ACCA (the Association of Chartered Certified Accountants) and Chartered Accountants ANZ in association with PwC:

Drawing on insights from over 150 finance professionals and 2,300 survey responses, the report shows that businesses now demand a broader skill set from their finance teams, as retrospective reporting and traditional approaches to planning and forecasting alone no longer meet key decision-makers’ needs. Being pre-emptive is the order of the day. 

The report highlights some ongoing concerns raised by survey respondents:

• A lack of clarity on how finance can add value to the business (38%)
• Finance being seen mainly as a cost center (32%)
• Current technology not meeting the needs of the organization (30%)

CFO wrote up the results of the Jefferson Wells’ 2024 Internal Audit Priorities survey:

More than two-thirds (66%) of internal audit teams say their capabilities do not fully align with their organization’s priorities.

With a large portion of CFOs already outsourcing many of their accounting functions, it’s no surprise that internal auditors have seen a stark rise in organizations using external support to supplement areas where their labor or technology can’t get the job done alone.

Nearly three-quarters (74%) of internal audit leaders say they’re now using external support to meet demands. That’s up 54% from 2023. It’s worth noting that the trend before 2023 was declining slightly year-over-year, down approximately 2% in 2022 and 6% in 2023.

BDO Global has walked away from messy Indian education technology company Byju after the client failed to provide the right paperwork (that sounds way less messy than it actually is, btw), reports Reuters:

Byju’s is fighting several battles including the insolvency proceedings and a $1 billion claim from U.S.-based Glas Trust.

BDO was appointed auditor earlier this year after Byju’s’ former auditor, Deloitte, left the company, citing several issues with the company’s financial reporting.

The auditor said in a letter to the company dated Tuesday that despite “inordinate” delays in filing its financials for the year ended March 2023, management had provided inadequate support to complete the audit.

Byju hit back and said that BDO made the mistake of trying to get the documents from the company’s board, which has been suspended.

The letter should have been addressed to the insolvency professional in control of the firm at the time, the edtech firm said.

Byju CEO Byju Raveendran claimed the auditors requested a big no-no:

Byju’s audit firm BDO had suggested backdating of reports, which the company refused, and their resignation is more of optics, a top official of the edtech firm alleged on Saturday.

“They have asked us to do multiple backdating of reports. All that happened recently. We did not agree. We have nothing to hide,” he said.

ICYMI: EY UK might appoint a woman to lead the firm and of course the media is making a BFD out of this.

In 2023, EY named Janet Truncale as its next chief executive officer. The move was a landmark appointment at the top table of the professional services industry – with none of the Big Four auditing and advisory firms having previously been headed by a woman beyond an interim capacity.

They must mean a Big 4 firm has never had a woman CEO on a global capacity because, uh, Deloitte’s Cathy Englebert exists and she became the first woman to lead a US professional services firm almost ten years ago. Is she still commissioner of the WNBA? remind me to look that up later.

One year on, EY could be about to see the same thing in its UK practice. EY’s UK business is the second-largest firm in its international network, behind the US – and to date, it has never had a woman in its top role. But a shortlist on which two-thirds of the candidates are women suggests this could be about to change.

Consulting.uk gives a nod to PwC’s leadership contest (see also: People Are Accusing Middle East Partners of Sexism in the Senior Partner Vote at PwC UK from us) and suggests Middle Eastern partners won’t be blocking any women this time.

Earlier in 2024, meanwhile, PwC also looked poised to appoint a woman to its top role with two women on another three-person shortlist. However, the firm eventually plumped for Marco Amitrano as its new UK and Middle East chief instead.

Despite the conservative stylings of its rivals, however, the EY selection process differs from PwC’s, so it would be wrong to assume a similar outcome this time on that basis just yet. While PwC allows all of its partners to vote in leadership elections, the succession process at EY sees an elected partner forum and the firm’s international bosses given final say.

See also: EY draws up female-dominated shortlist for top UK job from FT.

Philip Morris commissioned KPMG to do a study on fake cigarettes. Not the fun kind.

Philip Morris International Inc. (PMI) (NYSE: PM) today warns about the high levels of contraband and counterfeit cigarettes in the European Union (EU) year over year, with 35.2 billion illicit cigarettes consumed in the region in 2023, accounting for 8.3% of total consumption in the EU, an increase of 0.1 percentage point compared to 2022.

PMI praises European law enforcement agencies for their continued crackdown on criminal networks that profit from the illicit tobacco trade, and calls on regulators to advance a sensible, data-driven policy approach that puts consumers—and public health—front and center and that effectively addresses the challenges posed by the millions of adult smokers who are turning to the black market rather than quitting or, for those who do not quit, switching to smoke-free products.

The results of the 2023 KPMG annual study on illicit cigarette consumption, commissioned by Philip Morris Products SA, revealed that the illicit market in the EU continues to be a major threat for public health, public security, and states’ economies.

Illicit cigarette consumption in Europe [PDF]

BF Borgers is in trouble again but honestly, who cares? I’m half hoping this guy has the balls to show up somewhere and start trying to practice somewhere again.

Canadian Accountant:

One year after reaching a $1.2M settlement with American accounting firm Marcum LLP over unlicensed work, CPA Ontario has prosecuted an American firm, BF Borgers CPA PC, and its principal, Ben Borgers, of Lakewood, Colorado, for offences under the Chartered Professional Accountants of Ontario Act, 2017, and the Public Accounting Act, 2004.

Borgers and the Firm pleaded guilty to engaging in public accounting work in Ontario, including performing the audit of a reporting issuer, without registering with the Chartered Professional Accountants of Ontario or holding a Public Accounting License in Ontario.

In May: The SEC Just Charged Trump Media’s Spelling-Challenged Auditor with “Massive Fraud”

OK that’s it. Seeing a lot of discussion about PwC UK’s return-to-office happening in non-accounting corners around the internet, we’ll be talking about that shortly. If you see something interesting, have a topic we should cover that we aren’t, have a tip to share, or just want to complain, feel free to reach out via email or text any time.

Follow us on Twitter/X for the usual lukewarm takes and if you’re so inclined, sign up for the newsletter to get headlines in your inbox every Tuesday and Friday.

The post Monday Morning Accounting News Brief: I’m Happy I Got Laid Off From Deloitte; Finance Teams About to Be Irrelevant | 9.9.24 appeared first on Going Concern.

You’ve Got to Be Kidding

How To Make Accounting Cool Again [Forbes]
Oh here we go with this shit again. The best part of this article:

Academia

Navigating New Age of Accounting Means Balancing Books and Bots [Bloomberg Tax]
University of Richmond professor Robert Pawlewicz writes:
The accounting profession today isn’t the one I entered in 2000. It’s not even the profession that some of my students entered just six or seven years ago. Technology enhancements, including analytics and generative artificial intelligence, a dwindling pipeline of accounting students, and a generational shift in the population of accountants have forced structural changes on what has been typically seen as a hidebound and stodgy profession. The good news is universities that educate future accountants are adapting to this brave new world so their graduates can handle these new demands.

Former audit partner at Grant Thornton joins college as executive-in-residence [Marquette Today]
The College of Business Administration has added Gregg Rusk as its latest executive-in-residence in accounting. Rusk spent 35 years working at public accounting firm Grant Thornton, with 23 of them as a partner. During that time, Rusk advised more than 50 public companies and their boards on audit, internal controls and accounting issues. He assisted clients with initial public offerings that raised over $2.5 billion, public and private debt offerings totaling $10 billion, along with over 75 mergers and acquisitions. He worked at GT’s Chicago, London and Miami offices. He specialized in international companies and traveled and worked in 50+ countries across six continents.

News

Donald Trump says he’ll task Elon Musk with auditing the entire federal government [The Verge]
Former President Donald Trump says that if reelected, he’ll create a government efficiency task force — and that Elon Musk has already agreed to lead it. During a speech in New York on Thursday, Trump said the new efficiency commission would conduct a “complete financial and performance audit of the entire federal government” and make recommendations for “drastic reforms.”

Labor market isn’t breaking down but it’s ‘skating on thin ice,’ says KPMG’s Diane Swonk [CNBC]

Ultra-Rich Families Set to Control $9.5 Trillion by 2030, Deloitte Says [Bloomberg]
The wealth of ultra-rich families will likely swell to $9.5 trillion by 2030, according to estimates from consultancy Deloitte, as family offices grow and morph to rival hedge funds. The figure would mark a 73% jump from the current $5.5 trillion controlled by people represented by family offices, according to the report. The number of investment firms for the wealthy is expected to grow by one-third over the same time period, to 10,720.

Pawhuska financial auditor resigns [Pawhuska Journal-Capital]
The Vinita-based accountant that the City of Pawhuska engaged to perform its 2022-2023 audit [for a cost of $12,000] resigned, leaving the job more than eight months late and unfinished. City Manager Jerry Eubanks said he was informed by telephone Thursday, Sept. 5 by City Attorney John Heskett that the auditor, David Clanin, had resigned. Clanin was tasked with completing the 2022-2023 Pawhuska audit which was due to the state auditor and inspector by Dec. 31, 2023. With the report unfinished, the state is withholding the monthly remittance of gasoline tax revenue to the city. “I guess we’re going to have to find someone to do that audit,” Eubanks said. It is probable that this will mean a new auditor will have to start the job all over again, he said.

Earlier: Late financial audit frustrates Pawhuska city officials, complicates city budget

Big 4

Deloitte, top executive part ways over ‘conflict of interest’ [The Economic Times]
Professional services major Deloitte India has parted ways with its turnaround and restructuring services leader, Sumit Khanna, due to concerns related to a conflict of interest, multiple sources familiar with the situation told ET. “Deloitte conducted an inquiry for almost two months after an anonymous letter was received detailing certain allegations against Khanna. Both parties decided to part ways after this inquiry, which included clarifications sought from his side as well,” said a person aware of the case.

KPMG and Stephen Curry’s UNDERRATED Golf Ring the Opening Bell [Nasdaq]
UNDERRATED Golf is a purpose-driven business endeavor with the overarching commitment to providing equity, access and opportunity to student-athletes from every community.

Are you an ethical tax advisor? If not, watch out! [Deloitte]
More fallout from the PwC tax scandal. Way to go, P-Dubs, way to go.
The International Ethics Standards Board for Accountants (IESBA) tax planning project has culminated in a framework of expected ethical behaviours for accountants providing tax planning services and a new Ethical Standard for Tax Planning (the Standard). The Standard applies to ‘tax planning services’ and related activities. This does not include tax evasion, which is illegal, and covered by existing Code of Ethics standards. Instead, ‘tax planning’ covers advisory activities that assist an employing organisation or a client in planning or structuring affairs in a tax-efficient manner. Different sections apply to members in business who perform tax planning activities and members in public practice who provide tax planning services. This distinction essentially separates accountants who perform the in-house tax function of an organisation (‘in business’) and accountants employed by advisory firms (‘in public practice’).

Deloitte leases 80,000 sq ft space in Oberoi Commerz building in Mumbai for ₹2.09 crore per month [Hindustan Times] ₹2.09 crore = $249k USD. Deloitte Shared Services India LLP has leased 80,849 sq ft of office space at the Oberoi Commerz III building in Mumbai at a monthly rent of ₹2.09 crore a month, according to the leave and license agreement shared by Propstack. The space spread across two floors has been leased for five years. Terms of the deal include a 15% escalation in rent after 36 months. The starting rent works out to be ₹258 per sq ft per month, the documents showed.

Not Big 4

Meet the 2024 Best Midsized and Large Firms to Work For [Accounting Today]
Each year, Accounting Today and Best Companies Group select the Best Accounting Firms to Work For. This slideshow includes the best in the Midsized Category (firms with between 50-249 employees) and the Large Category (250 or more employees) with their rankings and select information on the firms, as well as photos the firms submitted themselves (or, occasionally, their website).

EY draws up female-dominated shortlist for top UK job [Financial Times]
EY has drawn up a female-dominated shortlist of candidates to succeed Hywel Ball as the firm’s UK managing partner, laying the groundwork for a contest that could produce the first woman to become the permanent head of a Big Four accountancy in Britain.

Binance Hires UK-Based Accounting Firm Grant Thornton to Advise on Audits [CoinDesk]
Binance has hired U.K.-based Grant Thornton’s Singapore devision to advise on accounting and tax matters, it announced Wednesday. The crypto exchange previously worked with auditing firm Mazars to produce a proof-of-reserves report for crypto clients, however, Mazars in December 2022 said it had paused work with Binance and other crypto clients amid concerns over the public’s misunderstanding of those reports.

Marcum Announces 15 New Partners Across the U.S. [Marcum]
Jeffrey Weiner, Chairman & Chief Executive Officer of Marcum, praised the newly appointed partners, stating, “These individuals represent Marcum’s dedication to excellence. They bring a wealth of experience, skill, and an entrepreneurial spirit. In a rapidly evolving world, they have shown adaptability and dedication to understanding and exceeding our clients’ expectations. On behalf of the entire firm, I congratulate our new partners on this well-deserved achievement.” The new partners assumed their roles September 1.

Relatable

Justice Jackson Had ‘Wrenching’ Time as Big Law Working Mom [Bloomberg]
Supreme Court Justice Ketanji Brown Jackson described her return to law firm life after the birth of her first daughter as “wrenching,” saying she “drastically underestimated the challenges of new motherhood.” “I can honestly say that going back into the office as a new mother, and returning to the cadence and pressures of Big Law, was the stuff of nightmares,” Jackson said in her memoir, “Lovely One,” which was released Tuesday.

The post Friday Footnotes: The Least Disingenuous Senior Partner; Accounting Education Evolves; KPMG Rings a Bell | 9.6.24 appeared first on Going Concern.

Rumors have been swirling for weeks like so many unflushable logs that KPMG was about to announce unlimited PTO, something their competitors at EY did four years ago.

As seen on r/KPMG:

You all were right. They just announced unlimited PTO
byu/Active_Ease_2367 inKPMG

EY’s switch to unlimited PTO was immediately shat upon, and rightfully so, after a leaked senior management email made the rounds. The email mentioned a cost savings of $36 million per year “associated with paying unused vacation at termination” as a primary motivator for the change. “Eliminates entitlement mentality and need for for carryover of unused time or sense of ‘loss’ by our people,” the email said.

It appears at first glance KPMG didn’t want to make the same mistake (though they’ll still be saving money on vacation that no longer accrues, to be clear). This is what KPMG said in their announcement, according to a commenter:

All PTO balances remaining at the end of FY24 (after the annual carryover limit is applied, where applicable) will remain with you and will be paid out to you when you leave the firm, based on your pay rate when you leave.

Elsewhere in the Paid Time Off Policy it says:

Regular Exempt Employees who have accrued, unused vacation as of September 30, 2024, under the firm’s previous Personal Time Off Program shall have all unused accrued vacation as of that date “frozen” (after the annual carryover limit is applied) and paid out at the time of separation, or paid out or used at such other time and circumstances as the firm determines in its sole discretion, at the employee’s then pay rate.

Wonder how many lawyers it took to write that.

Related read: The smoke and mirrors of unlimited paid time off

The post KPMG Gets Aboard the Unlimited PTO Train appeared first on Going Concern.

“Face-to-face working is hugely important to a people business like ours, and the new policy tips the balance of our working week into being located alongside clients and colleagues,” said PwC UK managing partner Laura Hinton in a statement to Bberg.

Anyone at PwC UK who’s angrily polishing up their resume this afternoon after receiving this news should read this: Survey Confirms What We Already Knew: RTO Mandates Were Intended to Get People to Quit.

In July, Financial Times broke the news that raises and bonuses were stingy at the King’s PwC this year, too. At least for some teams/service lines. They also axed the popular half-day summer Fridays, actions that when considered in the aggregate would compel a reasonable person to assume they really do hate you and want you to leave. See also: Comp Season PSA: If You’re Disappointed, It Might Be Because They Want You to Quit

Attrition must still be too high. Much like PIP distribution. Almost as if all these things are connected…

PwC UK, perhaps more so than other Big 4 firms or maybe it only appears that way because they keep getting stories about it in the news, is highly motivated to maintain an appearance of business as usual despite challenging market conditions. When they did a round of voluntary separations in June, the firm told staff to fib about their departure even though people talk and news of silent layoffs had been hanging in the air for weeks by the time people started abruptly disappearing.

Getting a bunch of people to leave because they don’t want to be in the office for at least 60% of the week is far cleaner than having to quietly usher another batch of people out of the back door before anyone notices.

Update: Financial Times followed up on this RTO news with a bit more info: the firm let everyone know they’ll be tracking them like cattle to ensure compliance with the new policy and that location data will be sent to staff career coaches.

In a memo sent to staff on Thursday, seen by the Financial Times, managing partner Laura Hinton said that the firm would begin sending staff their working location data every month, adding that employees must now spend “a minimum of three days a week” in the office or at client sites.

“We will start sharing your individual working location data with you on a monthly basis from January as we do with other data such as chargeable hours,” Hinton wrote in the memo. “This will help to ensure that the new policy is being fairly and consistently applied across our business.”

This applies to 26,000 people working at PwC UK.

Big Four Accounting Firm PwC UK Orders Staff Back to the Office [Bloomberg]

The post PwC UK Orders the Troops Back to the Office For Three or More Days a Week (UPDATE) appeared first on Going Concern.

NN anchor Elizabeth Prann took to the airwaves to let your TV-watching grandma know that accountants do more than taxes and warned a shortage of them could have catastrophic effects on the economy.

Yes, we already knew this. Grandma doesn’t.

She says: “Immediately you think ‘oh my goodness, tax season is in the spring and I need my CPA to help me with my taxes. If that person is tired they’ll make mistakes, the IRS is going to come knocking.’ That’s just one of the ways that this could impact us at home. But really it’s much more than that.”

Do you feel appreciated and valued yet?

In the second half of the short segment, they discuss AI. Highlight from that:

Morning in America host Markie Martin: “How is artificial intelligence playing a role?”

Elizabeth: “Well, it’s playing a role a lot. And if you think about people going into the business, well let’s think of Gen Zers. A lot of them make their decisions based on social media, or things online, maybe an accountant really isn’t that appealing, it’s not really that sexy, it’s not being shared online.”

“And then there are other factors like the pay…The pay is not great.”

So they really didn’t address how AI is playing a role, much less a lot, except to say that people used “an AI-generated form” to fill out their taxes in TurboTax last year (?). They also made a grave error in their reporting:

Earning the title of certified public accountant (CPA) requires at least a master’s degree and passing a grueling four-hour exam.

Wouldn’t just four hours of CPA exam be lovely and hardly grueling at all? One can dream…

“Salaries for entry level accounting positions aren’t very high,” read an accompanying article about the segment. “[A]nd it can take years to build a loyal client base.” Wat? What does that have to do with accounting degrees? You know what, never mind.

I guess as far as two minute segments go it could have been worse. We didn’t really come away from that understanding how AI can solve the accounting shortage but now your grandma is going to be freaked out about her 401k and someone’s uncle may finally understand that accountants do more than taxes so maybe that was an effective use of less than three minutes of broadcast time.

1. Words are dumb anyway. ︎

The post The Public is Now Being Informed Accountants Exist and Are Useful to Them appeared first on Going Concern.

CBIZ is the biggest firm to be data breached in recent months that we’re aware of since PwC and EY found themselves tangled in the MOVEit cybersecurity breach and ransom last year. CBIZ was also hit by the MOVEit vulnerability and informed 35,843 people their Social Security numbers were probably jacked by bad actors last year.

CBIZ Benefits & Insurance Services, Inc. provides actuarial, administration and investment advisory solution services for organizations, as well as providing recordkeeping and administration for retiree health and welfare plans.

According to the notification, it was retiree health and welfare plans that were accessed and the data included names and Social Security numbers.

Says the notification:

On June 24, 2024, CBIZ learned that an unauthorized party may have acquired information from certain databases. CBIZ promptly launched an investigation with the assistance of cybersecurity professionals. CBIZ’s investigation determined that an unauthorized party was able to exploit a vulnerability associated with one of its web pages, and acquired information from certain databases between June 2, 2024 and June 21, 2024. CBIZ conducted a review of the data acquired and determined that individuals associated with multiple CBIZ clients were impacted by the incident.

The retiree plan clients are:

• Central Pennsylvania Teamsters
• Knoll, Inc.
• Liberty Utilities
• Sanofi
• Sanofi Pasteur

Seven Maine residents were affected by this breach. No information was given on how many victims there may be in other states in the AG filing referred to here. CBIZ began notifying victims on August 28, 2024.

The post Hackers Stole Social Security Numbers From CBIZ Again appeared first on Going Concern.

On Saturday, Financial Times reported that due to a “market slowdown,” EY UK has gotten rid of a small number of partners and given out annual salary increases of 2.2% to its 4,400-person tax advisory business. It was six percent in 2023 and 10 percent in 2022. FT said bonuses would be smaller as well (£500 for junior staff — that’s $655 USD — to £4,000 for directors) and explained the math thusly:

Bonuses for EY employees are calculated using a “variable performance share price” system where each employee has a specified number of “shares” according to their rank, people familiar with the matter said. The number of shares is multiplied by the value of one share — a figure set by management each year — to determine what bonuses are paid out.

High performers would, as always, receive more though no number was given. EY brazenly told FT that its tax practice “continues to grow” and said that raises and bonuses “vary based on individual and business unit performance.”

FT said tax advisory usually does OK during market turbulence, or at least shouldn’t be suffering as hard as deals and consulting in this market.

The firm gave the same spiel about difficult market conditions last year, saying that due to rising costs and a difficult economic outlook, just about everyone would get a smaller bonus as it cut the raise and bonus pool by about 30%. The firm wouldn’t tell FT what raises and bonuses were for other service lines this year, hopefully some birdies with big flapping mouths are in reporters’ inboxes right now spilling those specifics.

After peaking at 11.1% in October 2022, consumer price inflation in the UK was down to 2% in the 12 months to June 2024 with services inflation at 5.7%. Taylor Swift was partially blamed for the higher-than-expected 2% increase (we’re not joking). Core CPI was at 3.5% as of June, officially making these raises a pay cut assuming EY UKers use energy and pay rent.

EY UK partner pay took a hit last year, dipping from £803,000 ($1.1 million USD) in 2022 to £761,000 ($997k USD) for the year ended June 30, 2023.

We’ve seen similar disappointment here on our side of the pond with some EYers reporting NO raise or bonus this compensation season. Y’all, they want you to quit. How many times do we have to say this.

EY cuts pay rises and bonuses for UK tax staff after slower year [FT]

The post The King’s EY Gives Out Pay Cuts For Raises appeared first on Going Concern.

Evidently Deloitte uses Canva. Consulting.com.au explains that Deloitte has “struck up a ‘first-of-its-kind’ strategic alliance with Canva” but it’s unclear what that actually means from the article because they’re using too many of those meaningless buzzwords.

Deloitte said that in delivering consistent and unified branding and content, the alliance would enable seamless collaboration across client’s different business units to boost both productivity while also reducing costs.

According to Canva’s own research, over 90 percent of employers now expect their employees to have design skills and knowledge, with visual communication having become “the status quo across every industry and profession.”

“We’re very excited to be entering into this Australian-first alliance,” said Deloitte CEO Adam Powick. “The enterprise landscape is more complex than ever with productivity pressures and technology advances in key areas like GenAI. In this environment, business leaders need to rethink how their teams work, collaborate, and communicate to get the full benefits of new technology.”

And:

Canva has been widely praised for simplifying the design process, and now attracts almost 200 million active users worldwide.

Among those active users, according to Powick, are the teams from Deloitte…

“The alliance will see Canva’s single solution platform combined with Deloitte’s digital transformation expertise to provide whole of business solutions and benefits focused on improving productivity and lowering operational costs,” said Deloitte.

Journal of Accountancy has published “Rewriting accounting’s employment narrative,” an article that has been written many times before but this one has the words moved around.

Disappointing employee experiences are harming the image of the accounting profession, the National Pipeline Advisory Group (NPAG) report concluded. To reverse the narrative, starting salaries must increase to become competitive with other professions looking for top talent, and employers must make workloads more manageable, work more interesting, and career paths and rewards clearer.

Well good, at least they aren’t suggesting the narrative is wrong.

Other incentives that promise to attract more high school and college graduates to the accounting profession are work experiences that offer career stability, work/life balance, positive environmental impacts, and a culture that embraces diversity, equity, inclusion, and belonging, according to the NPAG report.

They just won’t let this go, will they? The answer is right before their faces:

Starting salaries that are not competitive are among the biggest contributors to the talent shortage in accounting. NPAG’s national survey identified raising starting salaries as the most effective tactic to encourage people to choose an accounting career — 84% of professionals and 85% of students agreed.

Notice how articles like these always use the word “perception.” Common perceptions exist for a reason. Young people don’t mistakenly believe the hours in accounting are long because they saw a TB4A meme about it, TB4A makes memes about it because the hours are long.

Relatively low starting pay is one thing. Relatively low starting pay for long hours is worse, which, unfortunately, is the common perception of the profession. But accounting firms are also taking steps to tackle the overtime. Increasingly, they are trying to tame the busy season in an effort to counter the idea that accountants must work excessive overtime to meet tax and other deadlines.

“The idea.”

EY’s parading out its attitude toward neurodiverse talent again. Writes Fortune:

Neurodivergent workers have often been overlooked as a key source of talent, but more employers are waking up to how important that talent pool is. One company has been investing in its neurodiverse employees for nearly a decade—and it’s proving to be a huge business win.

Karyn Twaronite, global vice chair of diversity, equity & inclusiveness for EY, tells Fortune why accessing and supporting neurodivergent workers became a huge focus of her inclusivity and talent acquisition efforts.

“My first rationale was, I wanted to have the greatest access to the talent pool and technology skills. I wanted to expand our access beyond what we had,” she says. “They happen to be a very highly underemployed population around the world. The primary benefit was that I wanted greater and better technology skills within the EY workforce, and this has afforded us that.”

Allow me to leave this here:

Excerpt from that first-person essay about one person’s experience at the EY Neuro-Diverse Center of Excellence:

We were treated like a monolith kindergarten class.

We were forced into the same stereotypical accommodations whether we requested them or not, whether we needed them or not. We were made to work in a segregated office space. There were the regular HR rules and other unwritten rules we learned by getting caught out, like spending too much time in the mini conference room or asking too many questions.

And when our program managers weren’t choosing to infantilize and isolate us, they went the other way and paraded us around, selling the program and those of us in it like a circus act, on display, forcing us to identify ourselves by the program and therefore our diagnoses, too (which violated our rights to medical privacy.)

India’s audit regulator may no longer go soft on violators, according to Mint:

New Delhi: When India’s audit regulator imposed a fine of ₹10 crore on Coffee Day Enterprises Ltd’s auditor last month, it was among its highest so far—a fraction of global penalties.

As India’s National Financial Reporting Authority enters its seventh year, the extent of penalties for audit failures could shoot up particularly in instances of repeated non-compliance, said a person with knowledge of NFRA’s penalty regime.

“Penalties ordered by NFRA have been on the lower side in comparison to that of its global peers because it is early years for the independent regulator in India, and it is expected that compliance will improve and a situation doesn’t arise where NFRA also has to consider penalty at par with the level seen globally,” this person said, declining to be identified.

₹10 crore is about a million bucks.

Counterpoint from that article: “We should keep in mind the big differences in per capita income and earning potential in India and in the developed markets when examining the penalties to be imposed,” said a senior auditor, who spoke on condition of anonymity. “The audit regulator should handhold, do more inspections of audit firms, give them time for remediation of the deficiencies, and only after that consider penalties.”

From Kiplinger: A Private Equity Fund Bought Your Accounting Firm: Now What?

What’s in it for firm leadership?

The payday and the promise of more. When PE firms focus on a sector and start competing for acquisitions, earnings multiples to buy a company in the space tend to rise sharply.

It’s hard to get a clear picture of the exact EBITDA multiples PE firms are paying to buy into accounting firms, but the liquidity opportunity from this wave of acquisitions is widely considered to be more robust than the industry has seen before.

Alternatively, for owners who have been looking to grow their firms, PE firms tend to love founders who stay and drive investments in new acquisitions to complement their existing firm. There can also be synergies from outsourcing, technology and cross-ownership of accounting and wealth management firms.

Professional services firms have also long struggled with succession, and PE can play a big role in that. As owners of these firms age out, PE firms are more than happy to provide capital to allow for generational succession where younger members of the firm buy out older members’ partnership interests.

A managing director at an employee-owned firm thoroughly answers the question “Is employee ownership right for my firm?” in Accountancy Age:

Employee ownership can be a powerful tool for succession planning, particularly in accountancy firms where the alignment of stakeholder interests is crucial. For firms like ours, an EOT offers a solution that preserves the firm’s independence while ensuring that those who contribute to its success are directly rewarded.

However, the suitability of an EOT for your firm depends on several factors. For instance, firms operating as partnerships or LLPs would need to transition to an incorporated entity to fully leverage the tax benefits associated with an EOT. Additionally, firms involved in regulated activities, such as audit services, face specific regulatory challenges, as registered auditors must be owned and controlled by qualified auditors. This could necessitate restructuring certain aspects of the business, which may not be feasible or desirable for all firms.

Beyond the structural considerations, the financial health of the business is a critical factor. Firms that require significant capital for growth or investment might find the EOT structure limiting, as raising external funding can be more complex under this ownership model. It’s essential to weigh these considerations carefully before making the transition.

---

An ex-director who went out on her own and ambitiously tried to poach her former firm’s clients found herself in an Australian court:

A Victorian accounting firm has won a temporary injunction to prevent a former employee who set up a rival practice from poaching their clients.

Mount Waverly-based Oakwood Partners told the Federal Court it could face irreparable injury unless accountant Manlin Li was barred from soliciting long-term clients offering them cheaper tax services.

Li resigned at the end of January and by February, she was all up in that Rolodex soliciting clients.

Affidavits showed that she told clients she could prepare tax returns for “half price” and that “she would do a better job” than Oakwood.

Grant Fraser, an Oakwood client, deposed that “Ms Li offered to provide him with accounting services at a 20 per cent discount on what Mr Fraser was currently paying for services”.

Li argued that Oakwood’s clients were her personal intellectual property and that without her, the firm “was only a shell”.

In what appears to be a thinly veiled ad for a local accounting firm in a news site focused on a particular area of Wales, a director gives a glowing review of one of the young employees. Don’t you wish your directors talked about you like this?

Coxey’s director Joanne Evans said: “Molly has a natural affinity with all things accountancy related. It’s like her brain just automatically tunes in and understands whatever issue we are talking about at the time. We are all so proud of her, she’s a real ray of sunshine, a great personality to have around the office, everyone loves her.

“Young accountant spearheading major drive to boost the numbers at fast-growing firm,” Deeside.com Sept 2, 2024

And that’s enough of that! We’ve got a couple interesting items to write up today that were not included in this news brief, you’ll see those shortly. Please let me know if you have seen a story we should be talking about, are privy to some drama going down at your firm, or anything else via email, text, or Twitter. Bye! Love yooou.

The post Tuesday Morning Accounting News Brief: Deloitte Partners With Canva; Gaslighting Our Way Through the Shortage | 9.03.24 appeared first on Going Concern.

News

Morris County Native Michael Brown, 23, Was Set To Begin New Job At EY, Obituary Says [Pascack Daily Voice]
According to his obituary on the William Leber Funeral Home website, Michael graduated from  West Morris Central High School before earning a degree from the University of Alabama. He was set to begin a new job at EY in Atlanta, GA. He had checked off an item on a summer bucket list this year, hiking across national parks along the West Coast, camping out or sleeping on a friend’s couch, Michael’s obituary reads.

North Jersey man sues law and accounting firms, says they padded his bills to nearly $2M [NorthJersey.com]
An Oradell man is suing the law firm Sills Cummis & Gross PC and accounting firm CohnReznick, alleging the two entities padded his total bills to nearly $2 million. In the four-count suit filed Aug. 26 in state Superior Court in Passaic County, Richard Hekemian alleges that Sills Cummis & Gross, based in Newark, “overcharged and overbilled” him, including through double and multiple billing “for the same legal services, or simply ‘padding’ the invoices.”

Accountancy firms fight back against audit reforms [Financial Times Opinion]
A new rule agreed by the US audit regulator, the Public Company Accounting Oversight Board, will force each of the biggest firms to establish a body to oversee quality control, and to make sure at least one person on it comes from outside the firm. The rule is part of a broader revamp of quality control standards that the industry wrote itself decades ago and which are only now being updated by the PCAOB, some 20 years after the agency was created following the Enron scandal. A number of big firms, including PwC and BDO, are trying to kill the rule at the eleventh hour in a move that has raised eyebrows among some investor groups, which point out that many firms already boast of having bodies that sound a lot like what is being proposed.

Practice Management

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Check out this week’s top remote accounting candidates here:

How CPAs can bring order to a disorderly world [Journal of Accountancy] PCAOB Board member Christina Ho wrote something for JofA. We just want to share this unironic graphic:

Survey Says

2024 Internal Audit Priorities Survey Reveals Technology and Cybersecurity as Top Concerns Amidst Rising Generative AI Adoption [PR Newswire]
Jefferson Wells, a leading professional services firm specializing in Finance & Accounting, Internal Audit, Risk & Compliance, and Tax, and part of the ManpowerGroup family of brands, released the results of its eighth annual Internal Audit Priorities Survey. The survey reveals that while cybersecurity remains the top risk, the rise in the usage of Generative AI tools is escalating in risk priority for IA leaders and audit committees. Despite this, only 26% of organizations have fully integrated Generative AI standards into their governance framework, indicating a need for more comprehensive controls. Business Transformation and IT Deployment risks necessitate more in-depth internal audit skillsets in cybersecurity, data analytics, IT audit, and Generative AI, which are the most challenging to train and retain. Consequently, 37% of organizations are planning to increase staff to meet the heightened demand for these technology skills – the first significant increase in internal audit departments planning to expand their teams since 2020.

Associations Are Financially Optimistic and Developing their Tech Spend, According to New Wipfli Survey [PR Newswire]
According to Wipfli’s 2024 State of Associations Report, professional and trade associations alike show strong resilience and optimism about their markets, with finances and memberships up from the past year. Associations face several challenges within their space, and sometimes merging with similar organizations can help them better serve their members, leading 77% of respondents expecting to merge or consolidate with other associations in the next two-to-five years. Overall, while associations work within countless different verticals, common threadlines such as adaptability in changing scenarios, revenue streams, recruitment & retention issues, and technology concerns were present for associations of all sizes.

Municipal News

Village clerk of tiny Nebraska town resigns amid probe by state auditor’s team [Nebraska Examiner]
The village of Litchfield in central Nebraska “boasts a whopping 280 people,” according to its website, which goes on to say that the small-town atmosphere contributes to a high quality of life. But a Nebraska State Auditor’s Office probe into village operations has disrupted the calm, revealing apparent misappropriation of public funds, inaccurate utility billings and lack of documentation. Auditor Mike Foley, when releasing results, zeroed in on fiduciary responsibilities despite the size of a municipality. He said that “for various reasons” proper financial controls can sometimes be “less vigorous” among smaller political subdivisions.

Missouri state auditor granted new authority over local governments [StateScoop]
Starting Wednesday, under House Bill 2111, which Gov. Mike Parson approved in July, the Missouri state auditor will have the authority to conduct audits of local and municipal government organizations, including larger counties like St. Louis and Jackson, where most of Kansas City is located. “What we found over the years is that a lot of the fraud is in those smaller political subdivisions, because they have fewer internal controls, they have fewer employees, and they’re just in an environment that makes it easier for people to steal money,” Missouri State Auditor Scott Fitzpatrick told StateScoop in a recent interview. “House Bill 2111 will give us the ability to initiate audits of those political subdivisions, which we currently cannot do unless we get a petition from the citizens of the of that area.”

PA Auditor General releases audit claiming taxpayers were overcharged for prescription drugs [WTAE]
Pennsylvania’s auditor general released the findings of an audit on Wednesday, claiming taxpayers were overcharged for prescription drugs in 2022. “We found that $7 million in transaction fees were not disclosed by PBMs and MCOs (managed care organizations) to DHS (Department of Human Services), DHS then used this inflated data to set the rates it will pay in the future for prescription drugs,” Auditor General Timothy DeFoor said.

Audit finds Marshall County Fiscal Court had misreporting issues on financial statements [WPSD]
In a news release, Kentucky Auditor Allison Ball’s office said auditors tested 67 disbursements totaling more than $5.6 million. According to the auditor’s office, issues found included: Nineteen disbursements totaling more than $1.5 million that did not have a purchase order; Fifteen disbursements totaling more than $2.5 million that had a purchase order that was dated after the invoice date; Five disbursements totaling more than $2. 8 million that did not appear to be paid within 30 days because the invoice was not stamped when it was received; Five disbursements totaling $14,826 for utilities that were not approved by the fiscal court before being paid and were not included on the preapproved reoccurring expenses.

Firm Watch

After private equity investment, Meridian accounting firm signs deals with two other firms with Boise operations [BoiseDev]
Harris CPAs acquired Medford, Oregon-based KDP & Co., LLC, as well as Boise-based firm Chigbrow Ryan Murata, Chtd. KDP operates in the Boise area as well after a 2021 acquisition of Boise-based Whittaker & Associates. Harris President Josh Tyree told BoiseDev that the deals are more of a merger – and each of the former owners in KDP and Chigbrow Ryan remain as owners in Harris. “We’re not looking for any firm that’s just breathing, we are looking for firms that are servicing similar types of clients. We want to stay true to those things and get to some strength in numbers, we’re going to be more successful.”

Accounting firm in lease talks for Ballantyne office move, training center [Charlotte Business Journal]
Minneapolis-based CliftonLarsonAllen plans to take two floors in an unidentified Ballantyne building. Work on that 50,000-square-foot space is expected to be complete by December 2025. The firm’s Charlotte office is now in the Carillon building at 227 W. Trade St. About 250 CLA employees are expected to be located in the new space. Half of the space would be designated for office use. The other half would be used for what the company defines as a “connection center,” designed to help CLA grow and retain talent. It’s intended to bring employees from across the Charlotte area and the company under one roof for learning, development, continued training and more. CLA plans to host 150 to 200 employees at a time within the new space.

Meet Houston Business Journal’s 2024 Most Admired CEO Awards honorees [Houston Business Journal]
Bill Hickl, Texas Market Managing Principal (Tax) at BDO gets admired.

The 2024 MP Elite [Accounting Today]
To contend with a rapidly changing landscape, today’s top accounting firm leaders are required to wear more hats than ever before. Besides embodying the attributes of any great business leader, they often must serve as technologists, deal brokers, and brand ambassadors — not just for their firms but for an entire profession in dire need of attracting more young talent. PE, mergers and acquisitions, and artificial intelligence are all hot topics for the MP Elite, and it is their curious but mindful approach to these industry trends that make them role models in accounting.

Big 4

China Has Another Firm in Its Crosshairs Over Its Epic Property Bust: PwC [Wall Street Journal]
China’s epic housing bust has crushed big developers, bond-market investors and homeowners, causing billions of dollars in losses. Now Chinese regulators are zeroing in on another important player: PricewaterhouseCoopers, the auditor of choice for many of China’s biggest property firms.

Judge Rules $400 Million Algorithmic System Illegally Denied Thousands of People’s Medicaid Benefits [Gizmodo]
Thousands of Tennesseans were illegally denied Medicaid and other benefits due to programming and data errors in an algorithmic system the state uses to determine eligibility for low-income residents and people with disabilities, a U.S. District Court judge ruled this week. The TennCare Connect system—built by Deloitte and other contractors for more than $400 million—is supposed to analyze income and health information to automatically determine eligibility for benefits program applicants. But in practice, the system often doesn’t load the appropriate data, assigns beneficiaries to the wrong households, and makes incorrect eligibility determinations, according to the decision from Middle District of Tennessee Judge Waverly Crenshaw Jr. “When an enrollee is entitled to state-administered Medicaid, it should not require luck, perseverance, and zealous lawyering for him or her to receive that healthcare coverage,” Crenshaw wrote in his opinion.

What Big 4 do you think is the most morally corrupt?
byu/marihuano69x inAccounting

KPMG Recruits Veteran CPAs to Advise on AI in Audits, Quality [Bloomberg Tax]
KPMG LLP will lean on the expertise of three veteran accountants to advise the firm as it navigates the use of artificial intelligence in its audits and a ream of US rule changes. A three-person Independent Audit Quality Advisory Committee will provide outside input on how the firm responds to regulatory inspections. The committee will also help the firm as it measures progress toward strengthening the quality of its audits and builds on its adoption of AI, KPMG said Wednesday.

KPMG announcement: KPMG US Announces Formation of Independent Audit Quality Advisory Committee to Build on the Success of Quality Initiatives

You thought you knew the PwC saga. But did you know the firm released a cartoon book on its values featuring various blobs? My favourite page is this one, which presumably shows tax tweeties whispering secrets into ears pic.twitter.com/io4lPMP0g0

— Myriam Robin (@myriamrobin) August 4, 2024

The post Friday Footnotes: CPAs Need to Get Contemporary; Internal Audit Priorities for 2024; A PwC Comic Book? | 8.30.24 appeared first on Going Concern.

Here are the details:

Sequoia Financial Group, LLC (Sequoia Financial), an SEC-registered wealth manager with more than $19.3 billion in assets under management as of June 30, 2024, and Eide Bailly LLP, a top 20 national accounting firm, today announced a strategic partnership, with Sequoia Financial acquiring Eide Bailly’s wealth management practice and both firms collaborating to deliver expanded services to each other’s clients.

As part of the agreement, Eide Bailly Advisors, LLC, an SEC-registered firm with approximately $1.58 billion in assets under management as of April 30, 2024, will become part of Sequoia Financial Group, and Eide Bailly will have an equity investment in Sequoia. The firms expect the transaction to close in the fourth quarter.

Headquartered in Fargo, North Dakota, Eide Bailly has over $700 million in annual revenue and more than 3,500 employees in 40 U.S. offices, with a major footprint in the western United States. Eide Bailly’s wealth management practice serves individuals, trusts, estates, pension and profit-sharing plans, businesses, and charitable organizations.

OK, we’re with you so far.

Through this partnership, Eide Bailly’s wealth management team will join Sequoia Financial, which includes Sequoia Sentinel, a multi-family office focused on high-net-worth clients with more than $25 million in assets. Brad Kelley, principal and wealth leader for Eide Bailly Advisors, will become an executive vice president of corporate development for Sequoia Financial, responsible for leading joint initiatives between the two firms.

So Sequoia Financial is acquiring Eide Bailly’s wealth management team and Eide Bailly has an equity investment in Sequoia. That’s a fresh new twist on professional services investments. Since the beginning of 2023, Sequoia Financial has made six acquisitions: Karpas Strategies, AltruVista, Zeke Capital Advisors, Cirrus Wealth Management, Affinia Financial Group, and M Capital Advisors.

There’s private equity money tangled up in here too. Sequoia Financial Group sold a minority stake worth $200 million to Valeas Capital Partners in 2022. Valeas Capital Partners is one of the two private equity groups that bought a majority stake in Baker Tilly worth a billion dollars in February; of that investment, $900 million is alleged to have come from the other private equity group in that transaction, Hellman & Friedman. Sequoia Financial is also backed by Kudu Investment Management and FGA Partners (Pitchbook deets here) though there’s no press release announcing the latter’s investment in Sequoia (if a sequoia falls in a forest of PE money with no one to hear it does it make a sound?).

Eide Bailly hasn’t made any PE deals that we’re aware of, surely there would be a press release and a bunch of people employed there saying on Reddit “I’m polishing up my resume right now!” if they had or are imminently about to. But let’s get back to this…deal.

“We have found a true partner with a strong cultural alignment and broad range of services and expertise to support the complex wealth planning needs of our accounting and business advisory clients,” said Jeremy Hauk, Eide Bailly’s CEO and managing partner. “Over many decades we have built deep relationships with our clients. With Sequoia Financial, a recognized leader in wealth management, we can significantly enhance our offerings and serve more clients.”

Wait, so is this a referral-type situation or…? Confused again.

“This partnership is a key strategic move that will expand our wealth management footprint meaningfully, especially west of the Mississippi River, where Eide Bailly has a large presence in major wealth markets,” said Tom Haught, Sequoia Financial’s CEO. “Equally important, both firms measure success by client success. Together, we will help more businesses and families achieve their financial goals.”

Whatever.

The post Eide Bailly Gets in Some Kind of Wealth Management Circlejerk, IDK appeared first on Going Concern.

The someone added:

Just remember that Deloitte employees are never “let go” from their jobs, they are rightsized to align with the firm’s strategic objectives in light of economic uncertainty and sector level trends

Well, apparently a lot of people in audit are being rightsized this week.

Exhibit A: Plot twist, I’m ALSO being laid off.

After getting no real work done today, completely consumed by today’s events i.e. everyone around me being laid off… I also received my business update email to the shock, not only of myself, but of my team. I know you’ll all be in the comments asking, so let’s get that out of the way, I’m an audit senior, west region.

So my staff and I were laid off, it honestly feels like a mistake. There will be no one left on my team except for my manager and above, I feel a little sorry for them too. We had deadlines coming up.

I know the people around the office will try and make sense of this all, “they must’ve been a low performer” or “they must’ve missed too many time sheets.” Etc…

For the record, I was rated strongly agree on my last snapshot for both metrics. I was explicitly told this. I had made strong relationships with my team and the client. I was leading the engagement. I was doing well and my managers made that known. I hadn’t missed a time sheet this year, although I think I missed 2 last year so maybe that’s what did me in lol. Maybe it was some compliance thing that I missed last year? Who knows? They’ll chalk it up to market conditions. And no, I don’t have my cpa, even people with cpa were being laid off today/tomorrow.

TLDR: I received the “business update meeting” invite and spoiler the update is that I no longer work here anymore.

Another: Got laid off. It’s not performance related. It’s related to low business. I kind of already knew but it still stings

We don’t have much info other than a few Reddit posts, will see what more we can dig up and let you know. We don’t anticipate Deloitte will be making a public announcement but perhaps with enough stink they’ll feel forced to (spoiler: they won’t). It sounds like the numbers will be significant when all’s said and done. Wasn’t AI supposed to prevent a bloodbath like this?

Let us know if you were affected by this round of cuts and/or have more info by text or email.

The post Layoff Watch ’24: Deloitte’s Busy Scaring People with Business Update Meetings appeared first on Going Concern.

What all the Best of the Best have in common is a focus on operational and financial excellence. Leaders don’t get so caught up in the day-to-day routine that they overlook the basics of running a business and running it well. They watch their numbers and keep a steady eye on their growth goals, all while maintaining a positive work environment. Our list is designed to provide an even playing field to recognize the valuable work that drives our industry forward.

To determine which firms belong in the Best category, IPA scores firms based on their responses to the IPA Practice Management Survey using some of the following metrics: net revenue growth and leverage, along with governance policies, long-range planning efforts, professional development, outsourcing, compensation and process improvement.

There are 60 firms on the list with more than $10 million in revenue and 15 more that bring in less than that for a total of 75 firms that exemplify IPA’s definition of “Best.” Because we here at Going Concern concern ourselves most with dick-measuring contests and revenue battles, we’re only including the 20 firms on the list with more than $100 million in revenue. Trust us, most of this list is not a who’s who but rather a WHO? of firms.

Sorted by revenue, Forvis Mazars and CLA are the only two firms on the list bringing in 10 digits. The smallest firm on the list is Pittsburg’s Louis Plung & Company with $11,791,406. But remember, size doesn’t matter here. Not completely, anyway.

Yeah, we probably could have cut this list down to 10.

See the full list from INSIDE Public Accounting here.

Earlier:

The post These Are the ‘Best of the Best’ Accounting Firms (Allegedly) appeared first on Going Concern.

Just a few months after #28 IPA Top 100 firm Sikich announced a $250 million capital injection from Bain Capital, the firm has grabbed the basically unknown Saggar & Rosenberg of Rockville, Maryland. Well, Sikich Co-Managing Principal Antony Nettleton knows who they are.

“Over the last 25 years Sandy Saggar has built an impressive company that dovetails nicely with our own offerings and specialized services to non-profits and the government sector, where we have a strong presence,” he said. “We look forward to leveraging the expertise of his team, who are delivering comprehensive, enterprise-wide financial solutions to clients across the country. We will serve our collective clients together, with the integrity and quality our companies are known for, while taking advantage of emerging opportunities in the market.”

The federal government also knows the name Saggar & Rosenberg. According to USASpending.gov, an official website of the US government, S&G has won at least 33 government contracts totaling 1.2 million bucks. This deal gives Chicago-based Sikich an even stronger foothold in Washington, a “hyper-focused” growth plan zeroed in on federal government work that’s been underway since they acquired Halt, Buzas & Powell in 2019. Three years after that they bought Cotton & Company and last year they snapped up CliftonLarsonAllen’s entire federal government practice.

Saggar & Rosenberg founder Sandy Saggar made sure to mention the other clients in his press release quote, not just the federal ones. “Over the years, Saggar & Rosenberg has experienced significant growth serving a wide range of sophisticated clients who are demanding an increasing set of diverse services. We want to support those clients with a broader set of offerings as they navigate change and do so in a way that ensures the excellent service they’ve come to expect from us,” he said. “This expectation is what attracted us to Sikich, with their track record, strategy for growth and people-first mindset. Given the latter, I believe we have found a like-minded organization that will allow our employees to expand their skills and explore opportunities for growth.”

In the press release, Sikich made sure to mention that unlike those other PE-backed firms, they’ve retained majority control.

In May, Sikich secured a minority growth investment of $250 million from Bain Capital to help fund its robust acquisition strategy, enhance operational excellence and cement its professional services leadership position. The transaction, in a departure from traditional private equity deals in professional services, leaves Sikich with majority control of the company and is testament to its track record and growth strategy.

Three years since the first major private equity deal in accounting and we’re already talking about tradition? OK. They’re not wrong though, just look at recent deals by Baker Tilly and Grant Thornton. We’re told Doeren Mayhew’s private equity deal announced just last week is also a majority stake but that remains unconfirmed.

Quoting what we said when Bain Capital announced their investment in Sikich in May:

Time for Sikich to snag themselves a big fish instead of these firms no one’s heard of. We’re watching with great interest, so much so we’re adding a “Sikich” tag for the first time in the 15 years since this website was founded. Don’t let us down.

We’ll be waiting.

The post PE-Backed Sikich Buys an Accounting Firm, Subtly Smack Talks Those “Other” PE-Backed Firms appeared first on Going Concern.

Said the IRS in a press release:

The new combined effort follows a variety of increased scams and schemes that intensified during the past filing season that aimed to exploit vulnerable taxpayers while enriching fraudsters and promoters.

Convened at the request of IRS Commissioner Danny Werfel, the coalition of federal and state tax agencies along with software and financial companies as well as key national tax professional associations agreed to a three-pronged approach. They will work to expand outreach and education about emerging scams, develop new approaches to identify potentially fraudulent returns at the point of filing and create infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems.

Some familiar names have joined the effort, namely the National Association of Computerized Tax Processors, National Association of Tax Professionals, National Association of Enrolled Agents, and the National Society of Accountants. The AICPA is on board too. As are the McTax companies: Intuit, H&R Block, Jackson Hewitt, and Liberty Tax.

The IRS said there has been increased activity involving a variety of scams and schemes harming taxpayers, including the Fuel Tax Credit, household employment taxes and the Sick and Family Leave Credit.

The IRS has seen hundreds of thousands of dubious claims come in where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims.

Numerous other scams and schemes continue to be seen circulating on social media and are highlighted through efforts including the annual IRS Dirty Dozen list and alerts from the Security Summit partners. The new approach will increase collaborative efforts to raise awareness and education about schemes, not just during tax season but throughout the year.

Yes, folks, they’ve created a coalition to battle TikTok tax advice. Finally. “Social media is an easy way for scammers and others to try encouraging people to pursue some really bad ideas, and that includes ways to magically increase your tax refund,” said IRS Commissioner Danny Werfel back in April. “There are many ways to get good tax information, including @irsnews on social media and from trusted tax professionals. But people should be careful with who they’re following on social media for tax advice. Unlike hacks to fix a leaky kitchen sink or creative makeup tips, people shouldn’t rely on made-up ways on social media to patch up their tax return and boost their refund.”

Mmm, we might need a Coalition Against TikTok Makeup Hacks too.

Statements of support from leading members of the nation’s tax community for Coalition Against Scam and Scheme Threats task force [IRS]

The post Dozens of Taxy Groups Join New Coalition to Stop Scammers and TikTok Tax Advice appeared first on Going Concern.

Several private equity firms are considering offers for a stake in Grant Thornton’s UK business, in a competitive bidding process aimed at securing a valuation of up to £1.5bn for the mid-tier accountant.

Carlyle, Blackstone, Permira, CVC Capital Partners and Bridgepoint are among buyout firms weighing potential offers for Grant Thornton UK ahead of a deadline in September for formal expressions of interest, according to people familiar with the situation.

London-based Cinven is also seen as a potential bidder by industry executives, while New Mountain Capital, which took a majority stake in Grant Thornton’s US business earlier this year, is exploring an offer as part of a plan to merge the UK, Ireland and US operations, the Financial Times has reported.

The Times published a similar article — headline and all — a week ago.

Just sign it already, then. Or can’t you?

ICYMI: Over the weekend, #53 firm Doeren Mayhew announced they’ve entered into an arrangement with private equity firm Audax. Comments are rolling in and there’s a lively r/accounting discussion here. Anyone inside DM who feels some type of way about this deal is welcome, nay encouraged, to get in touch and talk about it (anonymously). Text the tipline at 202-505-8885 or shoot me an email.

Business Insider says “America’s most boring job is on the brink of extinction.” Oh the AICPA is going to be fuming for a while about that headline.

For most of his youth, Bryan wanted to be an astrophysicist.

He was obsessed with the Hubble telescope, and his bedroom ceiling was dotted with plastic glow-in-the-dark stars. When the Scholastic Book Fair came to his library, he’d beg his parents for cash to buy NASA photo books. To him, space science seemed the pinnacle of innovation, excitement, and existentialism.

So when, as a sophomore in college, he told his parents he was going to major in accounting, they gave him what Bryan (which isn’t his real name) could describe only as “a look.”

“An accountant?” he remembers his mother saying. “Why would you want to be an accountant?”

Certified public accountants have long been cast as penny-pinching list checkers with vanilla personalities and a zeal for taxes, but that stereotype seems to turn off Gen Z more than any previous generation. That perception plus the industry’s actual hurdles and pitfalls have compounded in the past several years to create a nationwide accountant shortage.

Nothing unique here but there’s this:

There are some signs that some firms are responding to calls for salary changes. Margaret Burke, the talent acquisition and development leader at PwC, said in a written statement that the firm has increased entry-level salaries for audit and tax associates “over the last several years,” but declined to say by how much. She also pointed out that PwC gives performance-based raises and bonuses “at all levels.”

Does it beat inflation at least?

Related: Just How Much Have Accounting Salaries Increased in the Last Five Years?

Outsourced staff in the Philippines are getting better amenities:

An accounting outsourcing provider is actively expanding its workforce, seeking to hire more accountants, bookkeepers and other professionals as it launches its second office in Cebu IT Park.

In a statement, TOA Global announced that its new office in the Skyrise 3B Tower covers over 5,000 square meters across five floors and can accommodate 940 employees.

Employees may work in-office, fully remote or on a flexible arrangement.

For a better in-office experience, the company said it invested in various amenities to support the team’s productivity, learning and well-being. These include an open-plan production area with natural light, training rooms, chillout rooms, a clinic, massage chairs, table tennis and billiards equipment and a karaoke or KTV room.

Regulators are “hitting auditors hard,” says CFO.com in this report of a report:

Horne got data breached:

On August 20, 2024, nationwide accounting firm Horne, LLP filed a notice of data breach with the Attorney General of Massachusetts. In this notice, Horne explains that the incident resulted in an unauthorized party being able to access consumers’ sensitive information. Upon completing its investigation, Horne began sending out data breach notification letters to all individuals whose information was affected by the recent data security incident.

The Horne data breach was only recently announced, and more information is expected in the near future. However, Horne’s filing with the Attorney General of Massachusetts provides some important information on what led up to the breach. According to this source, in December 2021, Horne detected suspicious activity within portions of its computer network. In response, Horne secured its network and then launched an investigation to determine what happened and what, if any, consumer information may have been compromised as a result.

Through this investigation, Horne learned that an unauthorized party had gained access to portions of its IT network between December 8, 2021, and December 13, 2021. While the investigation was able to confirm that certain systems were accessed, Horne was not able to confirm what information within those systems was actually accessed. Thus, Horne conducted a detailed review of the information contained within the compromised portions of its network. Horne recently completed this review.

JD Supra said publicly available data breach letters don’t mention what exactly may have been breached but individual letters sent out to potentially affected persons do.

CPA Ontario got around to punishing BF Borgers. Poor Ben F Vonesh.

CPA Ontario, the regulatory body responsible for the licensing and oversight of Chartered Professional Accountants and accounting firms in Ontario, has prosecuted BF Borgers CPA PC and Ben Borgers, of Lakewood, Colorado, for offences under the Chartered Professional Accountants of Ontario Act, 2017, and the Public Accounting Act, 2004.

Borgers and the Firm pleaded guilty to engaging in public accounting work in Ontario, including performing the audit of a reporting issuer, without registering with CPA Ontario or holding a Public Accounting License in Ontario.

“We continue to take action against accounting firms and CPAs who fail to comply with our requirements to practice in the province, in accordance with our mandate to protect the public and uphold the high standards of the CPA profession,” said Janet Gillies, CPA, CA, executive vice-president, Regulatory and Standards, CPA Ontario. “Unregistered and unlicensed firms and CPAs operating in Ontario bypass essential regulatory oversight, undermining public protection and confidence in public accounting.”

Bloomberg Tax reported a couple days ago that Ben Borgers is probably going to lose his Colorado CPA license.

Earlier: The SEC Just Charged Trump Media’s Spelling-Challenged Auditor with “Massive Fraud”

Business Insider published an as-told-to essay: I was fired from Deloitte after 18 months. Here are the mistakes I made as a new grad.

I wasn’t a great student in high school — I had a 2.4 GPA. Even my guidance counselor told me that community college would probably be my best option.

Yet I managed to land a job at Deloitte after college. Eighteen months later, though, I was fired.

He barely got the opportunity to get fired.

Throughout college, I tried hard to make money — I resold my classmates used textbooks and worked multiple part-time retail and service jobs.

I knew other people who got internships, but I didn’t manage to land any despite going to many Meet the Firms events, attending presentations, doing mock interviews, and submitting applications.

I remember thinking I crushed my first Meet the Firms event since I’d met many people and had gotten a stack of business cards. I was excited to follow up. Then my professor, the head of accounting, pulled me aside and told me that one of the Big Four firm’s employees had mentioned that I needed to clean up, shave my beard, and be more presentable.

At another event, I remember one of the Big Four recruiters telling me, “I’m not even going to take a look at your résumé because your GPA isn’t high enough.”

Worth a read maybe. TLDR He missed deadlines, told his senior manager he was going through some shit and she said “Hey, I know you’re going through a lot, but everybody goes through stuff in their life, but they all end up figuring out how to get things done on time.” LOL

I think that’s enough for now. Not hearing a whole lot of buzz at the moment which hopefully means you all are enjoying what’s left of your summer. Whispers of a beloved top 20 firm shopping itself out to private equity are getting louder, stg if this firm gets in bed with private equity I will give up all hope on the future of this profession. Not naming names but iykyk. If you hear anything let us know.

Comments are off on the Monday Morning Accounting News Brief by default but you may email, text, or catch us on Twitter if you have anything to say about the stories here or elsewhere.

Have a wonderful week and be well.

The post Monday Morning Accounting News Brief: Outsourced Office Gets Karaoke, ‘Chillout Rooms’; 2.4 GPA Guy Couldn’t Hack It in Big 4 appeared first on Going Concern.

Doeren Mayhew out of Troy, MI sold out to private equity on Wednesday. Press release coming soon. Junior partners are furious.

Lo and behold, this press release appears on Doeren Mayhew’s website. It’s dated August 23 but wasn’t there when we searched for it late Friday.

Doeren Mayhew, a national CPA and advisory firm, has entered into an alternative practice structure with Audax Private Equity (“Audax”), an alternative investment manager and capital partner to middle market companies, to support the firm’s future innovation and growth. Terms of the transaction, expected to close in September, were not disclosed.

Our tipster tells us it’s a majority stake but has no specifics other than that. What they lack in transaction details, our tipster makes up for in juicy gossip:

Non-voting shareholders were left completely in the dark and only told by email today. The voting partners haven’t even bothered to show their faces in the office since the sale. Non-voting shareholders were offered an insulting bonus that won’t be paid unless they stick around for 5 years.

And of those bonuses they added:

Non-voting shareholder bonuses vary from person to person. Unrelated to book size. They’re basically just playing favorites. People who they probably don’t care if they leave get the minimum. People they want to stay get more even if they have no book of business.

Doeren Mayhew is #53 on both the Accounting Today Top 100 and INSIDE Public Accounting Top 100 with $137,400,000 in revenue. And growing fast according to them:

Doeren Mayhew has demonstrated significant growth in the last decade, securing the No. 53 spot on INSIDE Public Accounting’s Top 100 listing of the largest U.S. CPA and advisory firms. With roots dating back to the 1930s, Doeren Mayhew’s more recent growth over the past two decades has been attributable to continuous talent development, expanded service offerings, and added technical depth, achieved organically and through mergers and acquisitions.

Audax’s investment provides additional capital to help Doeren Mayhew accelerate its growth and invest in enhancing the firm’s service offerings, technology infrastructure, and overall employee and client experience. Through the investment, Doeren Mayhew will also look to broaden the firm’s geographic footprint via continued acquisitions. The firm’s current leadership team will remain in place and continue to manage operations as well as provide the strategic direction for the firm.

As with other firms who’ve told the private equity vampire “sure, you can come right in through that window,” Doeren Mayhew will operate an alternative practice structure with Doeren Mayhew Assurance handling the audit side and Doeren Mayhew Advisors, LLC for business advisory, tax, and non-attest services. Both entities will operate under the Doeren Mayhew brand.

“The firm has demonstrated a strong track record of driving both organic and inorganic growth,” said Adam Abramson, a Partner at Audax Private Equity. “We look forward to partnering with them to continue building on their momentum.”

Anyone feeling some type of way about this deal is welcome to contact us to chat (anonymously). Text 202-505-8885 or send me an email.

The post A Bottom 100 Firm Signed a Private Equity Deal, We’re Told Some People Aren’t Happy appeared first on Going Concern.

Big News

Tax Firm Carrying On Arthur Andersen Brand Explores IPO [Wall Street Journal]
Do you know what’s really annoying? We were going to run this as a rumor story last week. People have been gossiping about it for weeks.
Andersen Global, the tax and legal services firm that emerged from the remnants of the defunct accounting giant rocked by the Enron scandal, is exploring taking its U.S. business public. The San Francisco-based firm is advancing efforts to pursue an initial public offering of the U.S. unit, Andersen, with the support of nearly all of its U.S. partners, according to internal memos reviewed by The Wall Street Journal. Ninety-nine percent of 264 participating U.S. partners voted in favor of continuing to consider an IPO earlier this month, an email showed. The U.S. unit, which offers tax, valuation and financial-advisory services, had more than 280 U.S. partners as of the start of the year. “This will enable me to advance discussions for key positions and put us in a place where we can pull the trigger when we are ready,” Andersen Chief Executive Mark Vorsatz said in a July 31 email to partners before the vote, referring to the hiring of executives and other personnel.

EY Sheds U.S. Audit Clients in Response to Shortfalls [Wall Street Journal]
Ernst & Young said it is cutting ties with many U.S. public companies as audit clients, a move to revamp its audit practice and improve the quality of its work. Eighty-four public companies exited EY as audit clients between Jan. 1, 2023, and Aug. 15 of this year, according to data from research firm Ideagen Audit Analytics. The firm also added 21 clients in that time. That is at least 50 departures more than at the other three large accounting firms—Deloitte, KPMG and PricewaterhouseCoopers—during the same period. In contrast with EY’s net loss of 63 clients, Deloitte, KPMG and PwC had net arrivals of 46, 13 and four, respectively, in that period. The reduced roster and loss of roughly $215 million in fees could threaten EY’s status as the largest auditor of U.S. public companies by market share, but that isn’t something the firm is worried about yet. The reduction is largely by design and is intended to “accelerate our transformation efforts,” said Dante D’Egidio, the firm’s Americas vice chair for assurance.

Audit

Founder of Trump Media’s Ex-Auditor Faces CPA License Loss [Bloomberg Tax]
The founder of an audit firm that was branded as a “massive fraud” by the SEC risks losing his certified public accounting license, a punishment that would prevent his firm, BF Borgers CPA PC, from performing external audits or certain complex tax returns. Colorado accounting regulators on Wednesday voted to refer the firm and its founder, Benjamin Borgers, to the state’s attorney general for CPA revocation, a spokesperson for the state’s Department of Regulatory Agencies said. Borgers may also voluntarily surrender his license, the board said.

Earlier:

SEC approves tougher rules targeting auditor ‘negligence’ [CFO Dive]
The new standard drew “no” votes from two of the five SEC commissioners, both Republicans. “This change is neither consistent with the requirements of the securities laws nor necessary or appropriate in the public interest or for the protection of investors,” Commissioner Hester Peirce said in a statement before the vote. The update “could have the unintended consequence of lowering audit quality and could worsen the trend toward fewer talented individuals entering the audit profession,” she said.

Prepping for the internal audit, CFO ‘inflection’ point [CFO Dive] Faced with a complex regulatory environment, new technologies, cybersecurity challenges, and an ongoing shortage of talent, today’s internal audit leaders are as swamped as any CFO. Much like the finance chief, today’s internal auditors have also seen their traditional roles morph away from just crunching numbers to being asked a key question: “What’s coming next?” said Andrew Struthers-Kennedy, global leader of Protiviti’s internal audit and financial advisory practice.

International

PH seen struggling with shortage of accountants [Philippine Daily Inquirer]
We were unable to find a verified reputable source to this so take it with a grain of salt. We do know the Philippines is approaching an accountant shortage of some kind, for now it mainly affects their own firms and businessness, not the American, British, and Australian accounting firms that are using this talent.
The Philippines is experiencing a shortage in accountants, a predicament that will likely worsen given the declining number of students taking accounting-related courses coupled with other emerging trends that seem to be taking a chunk out of the talent pool of traditional accounting firms. Marvin Galang, co-founder of financial mobile app built for freelancers called Beppo, said on Friday that they found alarming the results of a survey showing that there is a 41-percent decline in student enrolment in local accounting programs. “Subsequently, we also saw a decline of 35 percent in the number of [certified public accountant] examinees from 2019 to 2023,” Galang said during a conference focused on the local accounting industry.

Kelly Partners furthers its US exposure with new partnership [Accounting Times]
Kelly Partners Group (KPG) and FRSCPA, a Florida based company, announced the beginning of their partnership through executed agreements, based on a purchase price of AUD$7.6 million. FRSCPA is a public accounting firm “committed to providing its clients with high quality, professional accounting, tax and consulting services in a manner that incorporates sound professional business and personal ethics”. A wholly owned subsidiary of KPG will acquire 50.1 per cent of the business, with the remaining 49.9 per cent held by all four existing equity partners of the business under KPG’s partner-owner driver model.

Talent

Is your firm looking to hire accountants or auditors to fill remote roles? Check out this week’s top candidates from Accountingfly. Here’s a sample of a great candidate ready to start as soon as you are:

FTE Tax and Accounting Senior | Candidate ID #22105553

• Certifications: EA
• Education: BS Accounting, BS Finance
• Experience (years): 15+ years accounting and tax experience
• Work experience (detail): 12+ years with one public firm
  • Led a tax team of 5+ tax associates
  • Federal, SALT and payroll tax preparation and review
  • Full cycle accounting services
• Client niches: SMBs, Healthcare, Medical Practices, Publishing, Nonprofits
• Tech Stack: QB/QBO, Accounting CS, UltraTax, TaxWise, SurePrep, Onvio, Avalara
• Remote Work Experience: Y
• Salary: $90k, flexible
• Time Zone: Central
• Sign up to learn about this Candidate

Firm Watch

MHM Changes Name to CBIZ CPAs P.C. [Mayer Hoffman McCann] Mayer Hoffman McCann P.C. (MHM), based in Kansas City, Mo., announced today that it is changing its name to CBIZ CPAs P.C., effective immediately. CBIZ CPAs P.C. (CBIZ CPAs) is an independent CPA firm with 35 offices nationwide that provides audit, review and attest services, and works closely with CBIZ, a leading national provider of financial, insurance and advisory services, but is a separate legal entity.

Private Equity

The rise of private equity in accounting: Not just for large firms anymore [Thomson Reuters] Private equity (PE) firms typically invest in businesses with the goal of enhancing the value of the business (and thus the investment of the PE firm) over a period of time before exiting through a sale or public offering. Historically, PE investment was concentrated in certain select industries such as technology, healthcare, and manufacturing. Over the past decade, however, there has been a marked increase in PE interest in professional services, including tax & accounting firms. In fact, August 2021 is seen as the landmark year of PE firms’ splash into the accounting sector with the announcement by TowerBrook Capital Partners that it was investing in EisnerAmper, a 3,000-employee global tax & accounting firm. In less than three years, PE firms have bought stakes in five of the top 26 accounting firms, and this trend is predicted to continue, which can be attributed to a few key factors.

Big 4

Deloitte: Enterprises Face Gen AI Scaling Challenges [Technology Magazine]
The survey, based on responses from 2,770 director to C-suite level executives across 14 countries, shows that while organisations are committing more resources to Gen AI, they are struggling with scaling and demonstrating value. The report, The State of Generative AI in the Enterprise: Now Decides Next, finds that 67% of respondents are increasing their Gen AI investments due to perceived value. However, this commitment is offset by obstacles including data quality issues, investment costs and regulatory uncertainties. Jim Rowan, Applied AI leader at Deloitte Consulting LLP, states: “We have arrived at a pivotal moment for Generative AI, balancing leaders’ high expectations with challenges such as data quality, investment costs, effective measurement and an evolving regulatory landscape.”

Deloitte Legal Research Platform ‘Moonlit’ Spins Out [Artificial Lawyer]
Amsterdam-based Moonlit, a genAI legal research platform, has spun out of Big Four firm Deloitte to go its own way and compete in the legal data market with a focus on the EU. Dirk-Jan van den Broek, Co-Founder of the now independent Moonlit, who is a class action lawyer and also the founder of another legal tech company, ClaimShare, told Artificial Lawyer the business had spun out because ‘case law and legislation research and analysis are not a core business for Deloitte and Moonlit will thrive better as an independent tool’. They have also received fresh investment, including from Curiosity VC. Van den Broek told this site he could not reveal the amount, but added that ‘we can disclose that Deloitte is a launch partner and supporter of the platform’.

PwC loses major client Bank of China amid regulatory probe [Reuters]
Auditor PwC has lost its largest mainland China-listed client, Bank of China, to rival EY, adding to an exodus of clientele amid a regulatory investigation into its work on troubled property developer China Evergrande Group. State-owned Bank of China had as recently as March stated plans to reappoint PwC as its auditor for 2024 but in a filing late on Monday said it plans to appoint EY. The decision will be submitted for shareholder approval, it said. PwC, once the leading auditing firm in China, declined to comment.

KPMG’s Andrew Yates in his bonus era [Financial Review]
In quieter moments, you reckon this country’s big four consultants and accountants rue the day they first learned the name Peter Collins? PwC’s tax-leaking wrecking ball swung into his firm, but it’s the second-order damage that means things will never be quite the same in the professional services game. Take the recent necessary and embarrassing public discourse about the take-home pay of its top strivers. Particularly those exposed to advising government and lining their pockets with taxpayer dollars. Some are doing better than others in opening the kimono. This month, KPMG put out its 2024 Impact Plan. It’s one for the true-believers, running to some 76 pages, full of wise-sounding jargon and vague ambition. But on page 22, the firm proudly announces it’s the “first Australian Big 4 partnership” to promise to publish executive pay every year. It’s anonymised and in bands, but baby steps. Good for KPMG. That’s except the chief executive’s pay. KPMG’s report shows Andrew Yates took home $2.47 million in FY23 and $2.44m in FY24.

Tax

The reality of Kamala Harris’ plan to tax unrealized capital gains [Axios]
Silicon Valley was burning up the socials this week, after learning that Kamala Harris has tacitly endorsed a tax on unrealized capital gains. Lots of what was shared was inaccurate. Reality check: This only would impact a small subset of America’s wealthiest people, and most tech founders and investors would be spared. What to know: Harris didn’t release a new tax plan. Instead, her campaign said it agrees with a series of items in President Biden’s last budget proposal, the most relevant of which were nonstarters in Congress and didn’t become law. This includes the new tax on unrealized capital gains.

There Is No Kamala Harris Golf Tax—But Maybe There Should Be One [Forbes]
There has been much made on social media in the last twenty-four hours of a supposed proposal by the Harris administration for a 20% excise tax on all things related to golf. As with so many things on the internet, it appears to have no basis in fact and originates from a parody account on Twitter/X. However, golf courses carry with them myriad externalities, the cost of which are born by society writ large: from environmental impacts like water consumption, chemical fertilizer runoff, habitat disruption and soil degradation to waste generation and the taking up of valuable real estate. While the Harris administration may have no plans to implement a golf tax—it may not be a bad idea.

Google Gets Tax Deduction for Most of California Journalism Deal [Bloomberg Tax]
Most of the $242.5 million Google agreed to spend on journalism initiatives and artificial intelligence in California to avoid possible taxes or fees will be tax deductible. Alphabet Inc.’s Google committed to spend that much over five years to boost journalism in California under an agreement reached this week with Assemblymember Buffy Wicks (D). Of that, $130 million is meant for a journalism fund hosted by the University of California, Berkeley Graduate School of Journalism.

No tax on tips fires up Nevada hospitality workers: ‘I want that!’ [The Guardian]
Kristine serves gamblers playing countertop video poker screens at the center bar of Las Vegas’s Ellis Island casino. She declines to share her last name for privacy reasons, but is not timid about her support for Donald Trump when asked about his campaign promise to end federal taxation on tips. “I want that!” Kristine says as she fulfills cocktail waitresses’ orders. “Our tip compliance is too high. They take so much from our paycheck.” Tip compliance – the tax process for expected earnings from tips – has become a political football in Nevada, with federal lawmakers from both parties piling in to co-sponsor bills or present their vision for how tax exemption for tips should work.

Owner of North Carolina High Performance Car Business Pleads Guilty to Employment Tax Crime [Department of Justice]
North Carolina businessman George William Taylor Jr. of Wilmington pled guilty today to not paying more than $2 million in employment taxes and not filing employment tax returns. According to court documents and statements made in court, Taylor, owned and operated National Speed, a high-performance automotive services business. As the chairman and president of National Speed, Taylor was responsible for withholding Social Security, Medicare, and income taxes from employees’ wages and paying those taxes to the IRS. From 2014 through 2021, Taylor withheld the taxes, but did not pay those withholdings over to the IRS, nor did he file the necessary employment tax returns. During the same period, he also did not pay the employer’s share of those taxes to the IRS. In total, Taylor caused a tax loss to the IRS of $2,272,072.

Phil Liberatore, CPA and IRS Advocate, Reports IRS Shortcomings in Addressing Identity Theft and Backlogs [EIN Presswire]
Phil Liberatore, CPA and IRS advocate, says the Internal Revenue Service (IRS) is failing to assist victims of identity theft with receiving their tax refunds. This is according to a new report from National Taxpayer Advocate Erin Collins. The midyear report, released recently, also highlights concerns over misleading statistics regarding the IRS’s phone call response rates. “The delays in resolving identity theft cases are unacceptable,” said Liberatore. “Taxpayers who are victims of identity theft are already going through a stressful experience. To then have to wait nearly two years for resolution adds unnecessary hardship. The IRS needs to prioritize these cases to restore trust in the system.”

Municipal Messes

Mayor Frank Brocato gives perplexing audit update [Alabama Today]
For months, the City of Hoover has attempted to hide the details of its ongoing forensic audit while evading questions about its annual audit. At the August 05, 2024 city council meeting, Mayor Frank Brocato read a statement about the status of the two audits. The forensic audit was first reported only after it came up during an unrelated hearing. On the one hand, the mayor sought to downplay the need for the forensic audit, saying that under his watch, the city has “consistently received clean audit opinions.” On the other hand, the mayor stressed that there were concerns so worthwhile that the city brought in the additional accounting firm and that the current CFO, Jennifer Cornett, and her team continue to address the problems. The Mayor explained, “several of them have already been addressed. Mrs. Cornett and her staff are working long hours to correct the others.”

The post Friday Footnotes: EY Shrinks Its Audit Practice; Andersen Going Public; Someone’s Losing a CPA License | 8.23.24 appeared first on Going Concern.

Why 80%? Because many of the employers caught up in this flood of dubious ERC claims did so at the urging of what the IRS calls “aggressive promoters” — the cottage industry that popped up around the many pandemic-era credits and quickly overtook those people calling you about your car’s extended warranty as the most obnoxious of unsolicited calls. Even we got emails from these people promising huge payoffs if our business applied for ERC credits, credits that these non-CPA hawkers of tax credits swore were basically free money. Paycheck Protection Program (PPP) loans were actually free money, ERC not so much and using the PPP free money glitch disqualified employers from double dipping on ERC. Anyway, employers that fell for these promises would pay a fee to the “aggressive promoter” who urged them to file, a payment due prior to seeing any money from the IRS. Thus the IRS is being unusually kind and not requiring voluntary disclosers to pay back the full amount they received in erroneous ERC. You can bet they’ll be extracting that pound of flesh from whatever “aggressive promoters” they can nail to the wall.

Many employers that filed ERC claims — not only the ones suckered by smooth-talking telemarketers but legitimate, qualified employers — are still waiting on payments.

The voluntary disclosure program was strictly for employers who’d seen payouts as a way for them to pay it back. The voluntary withdrawal program was for those still waiting on ERC claims to be paid out, including employers with checks from the IRS they hadn’t yet cashed, and came with no penalty at all. If a voluntary withdrawal was accepted, the IRS would pretend it never happened (“Claims that are withdrawn will be treated as if they were never filed”) and everyone would go on with their lives.

ERC had very specific requirements, requirements that many filers didn’t actually meet. As its name suggests, Employee Retention Credits were meant to encourage struggling employers to keep people on staff in the early days of lockdowns. In order to qualify an employer had to pay qualified wages to some or all employees after March 12, 2020, and before January 1, 2022.

Generally, businesses and tax-exempt organizations that qualify are those that:

• Were suspended by a government order due to the COVID-19 pandemic during 2020 or the first three calendar quarters of 2021, or
• Experienced the required decline in gross receipts during 2020 or the first three calendar quarters of 2021, or
• Qualified as a recovery startup business for the third or fourth quarters of 2021

By the time the IRS issued a moratorium on processing ERC claims in September 2023, they’d discovered thousands of claims that failed to meet the basic criteria for the ERC program such as A) being a business and B) having employees on the payroll. But that still left plenty of borderline cases that weren’t immediately clear as legit or not. This past June, the agency announced it had digitized and analyzed about one million ERC claims representing more than $86 billion and was making progress on the difficult task of sorting ERC claims into fraud, maybe bullshit, and probably OK categories. They identified some common red flags that were a recurring theme in many ERC claims destined to be rejected or worse:

• Essential businesses during the pandemic that could fully operate and didn’t have a decline in gross receipts – The most basic of requirements to qualify for ERC. Essential businesses didn’t qualify because their operations weren’t suspended or disrupted by government orders. “Modifications that didn’t affect an employer’s ability to operate, like requiring employees to wash hands or wear masks, doesn’t mean the business operations were suspended,” said the IRS.
• Business unable to support how a government order fully or partially suspended business operations – If everyone could stay home and continue working, the IRS doesn’t consider the business disrupted.
• Business reporting family members’ wages as qualified wages. – As it describes. Wages paid to related individuals and members of the same household aren’t qualified wages for the ERC.

And as mentioned above, another flag for a possibly bad ERC claim is businesses using wages already used for PPP loan forgiveness. They can’t claim ERC on wages they reported as payroll costs to get PPP loan forgiveness.

Now imagine used car salesmen trying to explain all these rules to some rube in Nebraska who was just trying to keep his business afloat in 2020.

Leading up to the end of the voluntary disclosure program on March 22, the IRS pushed out many reminders that the window to admit your business took ERC money it wasn’t entitled to was quickly closing. Hurry up and disclose or it’s gonna hurt! This is your last chance or we’re gonna bend you over! Don’t make us do it!

Well, they’ve opened the window again. Announced August 15, Voluntary Disclosure Program v.2 is live and open until November 22. Here’s what they said:

The Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) will run through November 22 and allow businesses a chance to correct improper payments at a 15% discount and avoid future audits, penalties and interest. During the first disclosure program that ended in March, there were more than 2,600 applications from ERC recipients that disclosed $1.09 billion worth of credits.

To underscore the importance of participating in the Voluntary Disclosure Program, the IRS also announced it plans to mail up to 30,000 new letters to reverse or recapture potentially more than $1 billion in improper ERC claims. Thousands more mailings on additional questionable payments will be made in the fall.

“The limited reopening of the Voluntary Disclosure Program provides an opportunity for those with improper claims to come in ahead of IRS compliance work and get a discount on repayments,” said IRS Commissioner Danny Werfel. “This is especially important given increasing IRS compliance actions involving bad claims, many of them are the result of aggressive marketing tactics to lure unsuspecting businesses into claiming the complex credit. This provides a final window of opportunity for those misled businesses to make adjustments and avoid future compliance action by the IRS.”

2,600 applications is a lot but compare that to the 1.4 million open claims the IRS had in June. After the September moratorium, the IRS was seeing more than 17,000 ERC claims come in every week.

“The push by promoters flooded the IRS with questionable ERC claims, which clogged our systems and slowed work,” said Werfel. “We recognize well-meaning businesses are caught up in this, and we are taking important steps to help them. This includes reopening the Voluntary Disclosure Program as well as getting more payments out to qualifying businesses.”

As of May, IRS Criminal Investigation has initiated 450 criminal cases, with potentially fraudulent ERC claims worth nearly $7 billion. 36 investigations have resulted in federal charges so far, with 16 investigations resulting in convictions and seven sentencings with an average sentence of 25 months.

IRS reopens Voluntary Disclosure Program to help businesses with problematic Employee Retention Credit claims; sending up to 30,000 letters to address more than $1 billion in errant claims [IRS]

The post The IRS Is Trying to Get ERC Employers to Tell on Themselves Again appeared first on Going Concern.

Perhaps our own regulators could learn a thing or two from China about handing down punishments to audit firms. If you want it to hurt, hit ’em where it counts: their pockets.

For months now, PwC China has been dealing with the fallout of former client and currently bankrupt property developer Evergrande inflating revenues and then defaulting on its debts. Early this year a damning letter titled “Who brought PwC into the fire pit of Evergrande?” purportedly signed by anonymous partners began circulating around Chinese social media. The salacious note accused PwC of turning a blind eye to Evergrande fraud for a decade. PwC Hong Kong soon after put out a statement to say “the letter contains inaccurate statements and false allegations concerning PwC and certain of our partners.”

“The inaccurate statements and false allegations could tarnish PwC’s reputation and infringe our legal rights,” added that statement.

Yeah, it’s a little worse than a hit to reputation. Though the Hong Kong audit regulator did say in July it found no evidence to support the letter’s claims.

As a direct result of the Evergrande situation, PwC began to bleed clients. And because they were losing clients, they needed to lose some staff. With a headcount of 781 partners and almost 19,000 employees in mainland China, the firm was looking at laying off half of its financial services audit staff and as much as 20% of staff elsewhere in the firm including non-audit service lines.

And now FT is reporting that PwC China has begun warning clients that the firm expects to catch a six-month ban as part of its suite of punishments for what happened with Evergrande. This is double the three-month ban Deloitte Beijing caught for sloppy auditing of China Huarong Asset Management Co Ltd in 2023.

Said FT:

The action against PwC comes after China’s securities regulator in March said Evergrande had inflated its mainland revenues by almost $80bn in the two years before the developer defaulted on its debts in 2021, despite PwC’s China unit giving the accounts a clean bill of health.

The business ban, potentially accompanied by a large fine, would be the toughest ever action by Chinese regulators against a Big Four firm. It comes as Beijing steps up scrutiny over the role played by auditors in financial scandals, in this case in the crisis-hit property sector, which once contributed around a quarter of the country’s gross domestic product.

Clients were told PwC will be unable to sign off on financial statements during this ban but the firm “assured clients that staff will keep working during the suspension and will be able to certify the audit opinions on their 2024 annual reports once the ban is lifted in March,” FT wrote. Of course they will keep working.

PwC braced for 6-month ban in China over Evergrande audit [Financial Times]

The post China’s About to Dropkick PwC Right in the Wallet appeared first on Going Concern.

The Best Places to Work for Disability Inclusion list belongs to Disability:IN, a nonprofit “committed to empowering business to achieve disability inclusion and equality.”

The Disability Equality Index covers Culture & Leadership, Enterprise-Wide Access, Employment Practices, Community Engagement, Supplier Diversity and Responsible Procurement (unweighted). They explain it more in the FAQ:

To make it on the list, an employer needs to score 80 or above on the self-submitted assessment that asks about things like diversity policies, accommodations for people with disabilities, and if anyone in leadership has made a public statement in support of people with disabilities in the last year such as a speech or being quoted in an article. Disability:IN corporate partners do not have to pay to submit for the list — all firms listed below are corporate partners, Forvis and Wipfli are too but either didn’t make the list or chose not to submit — and the fee for non-partners is $900 for the US alone or $2,300 if they want to submit for all eight countries in which D:IN has an index.

All accounting firms on the 2024 list scored 100 with the exception of Crowe at 90:

• Crowe (90)
• Deloitte (100)
• EY (100)
• Grant Thornton (100)
• KPMG (100)
• PwC (100)
• RSM (100)
• Withum (100)

The group notes that “a score of 100 on the Disability Equality Index does not indicate or imply perfection.”

God bless whoever had to fill this questionnaire out because boy, it’s a lot. Here’s the Excel sheet if you want to check it out.

The post These Firms Scored High in Disability Friendliness appeared first on Going Concern.

Because she doesn’t start until October, her KPMG profile is still live:

Helluva resume there. Harvard Law School, working for President Biden back when he was just Senator Biden, US Department of Housing and Urban Development, Special Assistant to Obama for Justice and Regulatory Policy at the White House…and KPMG.

Vanguard couldn’t be more excited. “Tonya is an accomplished lawyer and trusted business leader who brings extensive experience in the public and private sectors,” said Vanguard Chief Executive Officer Salim Ramji. “She has spent her career championing access and transparency for individuals across a range of issues and amid increasingly complex legal and regulatory landscapes. We are pleased to add her counsel, business acumen, and policy expertise to further our mission of giving individual investors the best chance for investment success.”

For her part, Tonya is “thrilled” herself. “I’m thrilled to join Vanguard, a firm with a rich history of helping everyday investors get a fair shake,” she said. “For nearly 50 years, Vanguard has helped families save for their education and retire better with a strong ethos of integrity and commitment to client success. I welcome the chance to work with Vanguard’s talented and purpose-driven management and legal teams to help propel the next 50 years of the firm’s impact on helping investors reach their goals.”

Vanguard Announces Tonya T. Robinson as General Counsel [Vanguard]

The post Vanguard Poaches Someone From KPMG and Issues a Press Release appeared first on Going Concern.

KROST may not be a well known headline-grabber and they’ve only got about 100 professionals on staff but they’ve been around since 1939. The firm you’ve never heard of until now provides accounting, tax, and business consulting services mostly to the hospitality, technology, financial services, manufacturing, real estate, sports and entertainment, nonprofit sectors.

Both firms involved in this union were quite transparent about their reasons for joining forces.

“The profession is evolving,” said Paren Knadjian, Principal, M&A and Capital Markets at KROST. “To stay relevant and, more importantly, to continue to provide a wide array of evolving services to our clients, we need the additional expertise and capital that a firm like EisnerAmper can provide. We believe they are the ideal partner to help us achieve that goal.”

As you may remember, EisnerAmper was the first big firm to bring in private equity at a time when such a deal was considered revolutionary. That time was only three years ago, believe it or not. Since then, they’ve been busy gobbling up small firms.

With the KROST deal they’ll gain another foothold in the Southern California market (they merged in La Jolla’s Lindsay & Brownell in 2022). “It’s strategically critical that we expand our presence in America’s second largest city,” said Jay Weinstein, EisnerAmper Vice Chair of Industries and Markets. “And I can’t think of a better partner than KROST, which has maintained a standard of excellence for more than eight decades. We warmly welcome them to the EisnerAmper family.”

That’s all well and good but when are you gonna give us another FORVIS? Think big, Eisner.

Relevant r/accounting discussion: EisnerAmper was the first large accounting firm acquired by private equity, back in 2021. For those who have worked at Eisner, what changes have taken place since PE took over?

The post EisnerAmper Snags Itself Another Small Firm appeared first on Going Concern.