Welcome back to the workweek. I trust everyone had a safe and restful Memorial Day weekend. Although the weekend is behind us, you’re still welcome to weigh in on the weekend discussion: So What’s Next For the AICPA?.
Has anything of note happened since Friday? Let’s find out.
First, a few pieces of merger news.
The local news in Cincinnati covered this strategic move:
One of Greater Cincinnati’s largest accounting firms is being acquired by an Indianapolis company.
Blue Ash-based tax, advisory and audit firm Cassady Schiller CPAs & Advisors will become part of Katz, Sapper & Miller in a transaction that will be completed May 31. Terms were not disclosed.
The deal will be Katz, Sapper & Miller’s entry into the Ohio market.
Nearby, a Canadian firm is elbowing its way into the United States:
Melo, a Leamington, Ontario, Canada-based accounting, tax, legal, and financial advisory firm, has acquired Edwards, Ellis & Associates, which has offices in Troy and Ann Arbor (Michigan). Terms of the transaction were not disclosed. It is Melo’s first foray into the U.S. market.
A Forvis deal we didn’t feel warranted its own article when it was announced last week (and still doesn’t):
Accounting firm Forvis has struck a deal to acquire Charlotte-based ConTech 360 in a move targeted at bolstering its focus in the construction technology sector.
The transaction, announced May 20, is expected to close this fall. It marks Forvis’ first acquisition in the construction industry. Financial terms of the deal were not disclosed.
ConTech360, founded in 2019, provides construction technology services. Its offerings are tailored around providing information technology solutions, reducing overhead and increasing efficiency.
ConTech360 has more than 125 active clients and 60-plus consulting engagements, a Forvis spokesperson said.
We should really discuss the biggest merger though. KPMG Switzerland and KPMG UK are clanning up:
Partners at KPMG Switzerland and KPMG UK have voted overwhelmingly in favour of merging their partnerships and will become a new $4.4bn business, working across audit, tax and legal, and advisory.
This will make the new firm the second largest in the KPMG network by some distance.
Jon Holt, KPMG UK’s chief executive and senior partner will lead the new partnership as group CEO with Stefan Pfister, current CEO of KPMG Switzerland as group deputy CEO of the combined firm.
“This marks a historic moment for both firms. We will be stronger as one combined firm and together we will have the scale to significantly enhance our ability to deliver great outcomes for our clients both internationally and within our domestic markets,” says Jon Holt, chief executive and senior partner of KPMG UK.
The Institute of Chartered Accountants in England and Wales (ICAEW) has published a report called Evolution of Mid-Tier Accountancy Firms. The short:
ICAEW’s latest research reveals the polarised reactions to private equity funding within the sector, as well as expectations for profit growth and shifts in services lines over the next three years.
We can do a full breakdown of the paper later, for now here’s an interesting bit:
Recruitment of qualified staff was identified as a top talent challenge for 67% of respondents, while recruitment of trainees was considered a challenge by 10%.
And this:
Firm structure and operational model
Firm structures are evolving rapidly, with growth through mergers and acquisitions (M&A) occurring for nearly half of firms in the recent past, and more than half looking to pursue this activity in the next three years. This ongoing activity means that firms counted in this tier are in a perpetual state of flux. M&A has been a popular mechanism to help many firms satisfy their ‘growth-led’ culture.Some firms are embracing private equity investment, seeking capital and strategic partnerships to fuel growth and innovation. Other firms see an opportunity to distinguish themselves by remaining independent and growing organically. The emergence of private equity in the profession has polarised opinions, but it appears set to remain part of the range of structures operating in the mid-tier.
AccountancyAge wrote about the private equity section of the report:
When asked about private equity, 57% of respondents ranked it as a top three macro trend impacting the profession.
Additionally, 12% of firms said they had secured private equity investment, while another 12% said they would like to secure PE investment in the next three years.
However, 64% said PE was “not [or] not at all attractive” to their firm, while 17% said they saw remaining independent as an opportunity.
“These findings paint an important picture of mid-tier practices as firms evolve to face the challenges of the future,” says Alan Vallance, ICAEW Chief Executive.
Yeah, we definitely need to dig around in that report.
A Spokane, Washington business journal wrote about a CPA of note. This guy sounds cool.
Brian Behler, CEO and president of Skils’kin, a nonprofit that provides opportunities for people with disabilities, will retire in June following a 13-year tenure with the organization.
Behler, 65, is a certified public accountant who founded and built several companies over his nearly 40-year career. A graduate of Washington State University, Behler started his career in Seattle with the public accounting firm Arthur Andersen & Co. After leaving that role in 1989, Behler then spent the next decade starting multiple businesses in the Puget Sound area, including a manufacturing and import company of specialty coffee and a soft drink company specializing in bottled Italian soda. He also was for a short stint a part owner of a 300-foot ship that he sailed to Alaska to process salmon.
How he responded to the question of taking a different path in life:
As someone who’s had so many career experiences, is there something else you wish you had done?
For those of us who get to this stage in our career, it’s a common reflection. If not this, what else would I have done? I would hope that I might have gone the general contractor route. I like creating stuff. I learned that from my parents and picked up those skills. I like envisioning how a house would look if it were more open, or if this room should be elsewhere. I’ve torn out a lot of walls in my homeowner career. At first, it was because I didn’t have a lot of money, but then I started thinking in terms of improvements I can make to turn it into a masterpiece. The house I live in now is quite modest, but it has a masterpiece outdoor kitchen.
I’d love to hear from our readers on this question. What would you have done with your life had you not ended up in accounting? I always wanted to be a writer when I grew up. But, like, a young, female Ray Bradbury sort of writer, not a laptop hobo grinding out shitposts for an accounting blog. Life’s funny sometimes.
Journal of Accountancy has advice for practitioners with childfree clients:
Traditional financial planning strategies assume that clients loosely follow a life path that starts with accumulation during years that include marriage, homebuying, child-rearing, and career and/or business growth, followed by decumulation through retirement and/or succession, estate, and legacy planning. However, this general formula, which is heavily focused on helping clients pass along the maximum amount of wealth to next generations, is not as relevant to the more and more Americans who are opting to remain childfree.
The Pew Research Center found in 2015 that the portion of U.S. women choosing to forgo child-bearing had risen by 50% overall since the 1970s, after a decades-long rise partially offset by a decline in the 2000s. More recently, a 2021 Pew survey of childless adults revealed that 44% said they are unlikely to ever become parents, a 7-percentage-point increase in just three years.
These trends have expanded a demographic for CPA financial planners to consider: the childfree client, who has financial planning needs and considerations as varied as the reasons they have for opting out of parenthood. Here are the key considerations and strategies to help this growing group plan effectively for their financial futures.
Related paper: The Rise of DINKs: How Childfree Couples are Reshaping Economies
Bloomberg Law covers the Deloitte retirement lawsuit:
Arguments over Deloitte LLP’s handling of its retirement plan fees prompted different reactions from a panel of Second Circuit judges, whose questions to counsel Friday suggested disagreement over how to view the case before them.
Judge William J. Nardini pointed out an apparent contradiction in the Deloitte workers’ case, saying they claimed to lack information about the administrative services received by various retirement plans while simultaneously maintaining that these services are essentially the same across the board and can be easily compared among plans.
The workers’ attorney, Mark K. Gyandoh of Capozzi Adler PC, responded that major national retirement plan recordkeepers provide services that can be considered fungible.
Nardini, who appeared unimpressed with this answer, said retirement recordkeepers provide a host of different services that can’t be considered fungible, including maintaining participant call centers and tax form services.
“How can you tell us they’re basically the same if you don’t know what they are?” he asked Gyandoh.
CBC News talks about how EY made half a million dollars:
The audit that led to an Ottawa Hospital lawsuit, with explosive allegations about a fraud conspiracy involving its contractors and two hospital managers, cost taxpayers more than $500,000, according to new information obtained by CBC.
The hospital has fought CBC’s efforts to obtain information about the true cost borne by the public for a case that began in 2016 and was settled more than four years later without going to trial.
…
In 2015, EY Canada was hired as an outside auditor to investigate “irregularities” among the hospital’s procurement practices.
Some of the findings of the initial investigation were detailed in an eye-popping statement of claim filed by The Ottawa Hospital (TOH) in January 2016.
It alleged a “fraudulent scheme” involving two former longtime directors, both in charge of large budgets and projects. The suit alleged the managers conspired with five contractors to defraud the hospital in exchange for luxury vacations, family favours and discounts on home renovations.
EY’s investigations continued for three more years, billing a total of $549,235.32, according to the information released by the hospital last Friday.
Best r/ottawa reaction:
Comment
byu/fibonaccipizza from discussion
inottawa
KPMG borrowed a word from Grant Thornton:
KPMG launches its first-ever dynamic Audit Quality Report to meet client and market demand
KPMG Audit has modernized its Audit Quality Report (AQR), transitioning it from a static document, released once a year, to a dynamic, data-driven platform that will be updated to respond to market developments.
KPMG is the first Big Four firm to buck the trend and truly modernize its Audit Quality Report. The new platform features the full report, a dynamic data dashboard that will be updated frequently, and blogs and data graphics aligned with the five pillars of our Audit Story.
I daresay this is might actually be cool?
Some notes:
– KPMG Audit’s nearly 10,000-strong Next Gen Auditors are developing new skills and bringing diverse perspectives to engagements. Most Audit professionals (62%) are from underrepresented groups, a 5% increase from 2020.
– Through KPMG Audit’s Engagement Management Lifecycle program, the practice is addressing the root cause of recent quality challenges while delivering a better and more consistent experience for our auditors.
- KPMG Audit pulled work forward, reducing hours for the core engagement team in traditional busy season while standardizing and centralizing more activities.
- The Audit practice monitored 100,000+ key milestones through monthly reviews of its public clients to help teams execute their audit plans.
– More than 1.2 million audit hours involved professionals from the Tax and Advisory practices.
We’ll be keeping an eye on this.
Some drama in Jersey City a partner definitely didn’t sign up for:
A woman was removed from Wednesday night’s Board of Education meeting, but not before the Board was presented with the results of a financial audit of the 2022-23 school year and a Corrective Action Plan.
The report found payroll discrepancies, inaccurate and inconsistent accounting, and contracts potentially issued improperly.
There were a total of 17 findings in the audit, down from the last audit’s 23 findings. “It’s more about the magnitude of a finding and not the number of findings,” said Jeffrey Bliss, Public School Accountant from Lerch, Vinci & Bliss, who gave the presentation.
…
Toward the end of the meeting, a member of the public removed after refusing to obey Board President Dejon Morris’s order to leave. Morris had ordered the room cleared after several audience outbursts. “The audience will be in order” Morris had shouted, while banging his gavel. When the shouting began again, Morris said “security just clear the room.” Thirteen minutes of back and forth between Morris, the Board’s attorney and the audience member ensued, culminating with the woman’s removal.
Apparently this isn’t the first time a Jersey City BOE meeting has devolved into chaos.
OK, I think that’s it. If you have something to say about any stories linked here, articles we’ve written, important happenings around the profession we may have missed, or literally anything else remotely related to the practice of accounting (or cats), give me a shout by email, text, or Twitter. Text is your best bet, my inbox is a quagmire of bullshit press releases. All tips are anonymous unless you expressly say otherwise for some weird reason.
Have a great week!
