Big 4
EY auditors escape potential Wirecard sanctions after leaving profession [Financial Times]
Germany’s audit watchdog closed investigations against four current and former EY auditors involved in inspecting collapsed payments firm Wirecard after they handed back their professional licences and left the profession earlier this month. Under German law, Apas can only probe and sanction potential misconduct by active accountants who are enrolled in the country’s register of public accountants. As the watchdog’s delayed ruling into EY’s controversial audit for the disgraced German payments firm approaches, four current and former employees this month resigned from the country’s chamber of public accountants, the WPK.
This week in tax: PwC partner banned in Australia over tax leaks [International Tax Review]
Peter-John Collins, former head of international tax at PwC Australia, has received a two-year ban from serving as a tax agent after leaking confidential information. On Monday, January 23, the Tax Practitioners Board (TPB) confirmed a report from the Australian Financial Review that it had deregistered Collins for failing to act with integrity. Collins was a member of an advisory group involved in confidential policy discussions with the Australian Treasury. He was found to have broken confidentiality agreements on Treasury discussions in 2013, 2016 and 2018. The TPB found that Collins shared information with other PwC staff in Australia and overseas. Some of this was later shared with clients and potential clients, according to the board. Collins left the ‘big four’ firm in October 2022.
KPMG POISED TO CAPITALIZE ON INCREASED DEMAND FOR OUTSOURCING CORPORATE TAX DEPARTMENTS [PR Newswire]
ONLY POSTING THIS BECAUSE THE ALL CAPS IS FUNNY.
SCAD and Deloitte Unveil New Digital Design, Research, and Innovation Studios [Business Wire]
The Savannah College of Art and Design (SCAD) has united with Deloitte, the world’s leading service provider, to establish the Deloitte Foundry at SCAD — a preeminent design, research, and innovation studio at the world’s elite university for creative professions. Since 2019, Deloitte has collaborated closely with SCADpro, the university’s in-house research and design studio, to provide hundreds of SCAD students with opportunities to create design solutions for some of the most complex issues facing public-sector organizations. Over 30 SCAD graduates are now employed by Deloitte as UX designers, service designers, media creators, and more.
Push to review government use of private accounting firms and major political donors amid PwC scandal [The Mandarin]
Meanwhile, in Australia: Greens senator Barbara Pocock has called for a government review of private consulting firms following revelations that a former partner from a so-called ‘Big 4’ consulting firm leaked confidential information from a government consultation process. Pocock said the symbiosis between government and these consultant firms “rip the heart out of the public service”, attracting talent from the APS, who were then contracted to do government work such as policy analysis and program implementation “for hugely inflated fees […] that could and should be done much more efficiently by a robust public sector”. “These big companies are poaching some of our best and brightest public servants,” Pocock said. She added that government employees serving the national interest would be more inclined to act ethically and without conflicts.
I Am Michelle Go’s Father. I Am Marking Her Death Where She Lived. [New York Times]
On the one year anniversary of his daughter’s murder in NYC, the father of former Deloitte senior manager Michelle Go wrote a touching letter for NYT: New York is the place where Michelle built her professional life, made so many friends and, most of all, enjoyed her life. It is because of her that on a regular basis, we as a family travel from our home in California to the city she called home. We hope that the city does not become a place we can only associate with her death. We pray that one day we will again see the New York that nurtured the love that Michelle had for life.
Law & Order
Northrop Grumman Faces Criminal Probe of Pension Accounting [Bloomberg Law]
The US Department of Justice has issued a criminal subpoena to defense contractor Northrop Grumman Corp. seeking information about the company’s calculation of pension expenses. The aerospace and defense company received a subpoena on Dec. 9 focusing on its financial and cost accounting controls, it said Thursday in its 10-K. The company has been facing questions on those issues from the Defense Contract Management Agency since 2019. The agency said in 2020 that assumptions the company used from 2013 to 2019 were potentially not compliant with Cost Accounting Standards, regulations that govern cost accounting requirements for government contracts.
Lawsuit says Kansas City development agency controller lied about his past, stole millions [KCUR]
When Lee Brown applied to the Economic Development Corporation (EDC) of Kansas City to oversee the agency’s finances in 2015, he said he held degrees in law and accounting, had worked at a prestigious accounting firm and earned a license as a certified public accountant. Discrepancies about Brown’s past surfaced during his background check, but the EDC hired Brown anyway. In his position as the EDC’s controller, Brown held considerable influence over how money flowed for a nonprofit that oversees several powerful agencies that grant tax breaks and make deals for development projects. But Brown did not have the degrees he said he held. He never worked at PriceWaterhouseCoopers. He did not have a CPA license.
Investors Wooed By Big Accounting Firm And Law Firm – It Was All False [Lexology]
Investors were assured not just by Mr. Ridall but the documents he furnished. Those included a statement from KPMG touting the success of one prior investor. The statement claimed that the investor return was 81%. Later, to again assure investors, letters from international law firm K&L Gates were produced to investors touting the spectacular investment returns obtained by Mr. Ridall. In fact, the KPMG documents were fabricated. The K&L Gates letters were fraudulent. The money had never been invested. The claimed investment history of Mr. Ridall was a lie. The complaint alleges violations of each subdivision of Securities Act Section 17(a), Exchange Act Section 10(b), and Advisers Act Sections 206(1), 206(2) and 206(4). The complaint is pending.
Firm Watch
Accountants Baker Tilly and Swedish Bank SEB Moving to The Spiral [Commercial Observer]
Accounting firm Baker Tilly and Swedish bank Skandinaviska Enskilda Banken AB (SEB) will shrink their New York office footprints and relocate to Tishman Speyer’s recently completed tower The Spiral, Bloomberg first reported. In the larger of the two deals, Baker Tilly signed a lease to take 28,000 square feet on the 22nd floor of the building at 66 Hudson Boulevard, according to a spokesperson for Baker Tilly. The firm will downsize from its current 49,328 square feet at One Penn Plaza.
Armanino Announces Record New Partner Class for 2023 [Business Wire]
Armanino LLP announced it welcomed 26 new partners in its 2023 class. The largest new partner class in firm history includes leaders who provide tax, consulting, trust and business management services. Fully half of the new class are women, with many completing the firm’s Executive Access Program, which pairs high-potential female managers with firm executives to provide them the opportunity to build relationships with key leaders and help drive career advancement.
Career
America, we have a problem. People aren’t feeling engaged with their work [NPR]
When Tanvi Sinha first got into accounting 17 years ago, she worked from the office every day, even Saturdays in the busy season. She enjoyed lunches out with colleagues and opportunities to learn just by listening and watching others. She grew professionally, aspiring to leadership roles. Now that her company has made working from the office optional, Sinha wonders if newcomers to the field will ever feel as connected to their work as she has been. “I’m pretty sure that their engagement would be affected,” says Sinha, now an audit manager with the accounting firm Matthews, Carter & Boyce in Fairfax, Virginia. A new report from Gallup finds that large numbers of workers, especially Gen Zers and young millennials, are not engaged with their jobs. And that could make their climb up the career ladder harder, as well as hurt companies’ overall performance.
The Accounting Tidal Wave and What it Means for Businesses [New Jersey Business]
Fierce competition amongst CPA firms and private industry for experienced staff with the CPA designation is creating significant increases in compensation levels. In the past, a six-figure salary was reserved for someone who achieved the level of supervisor or manager. Today, senior accountants with no more than two or three years of experience are sometimes earning more than $100,000. These increases in compensation are no doubt resulting in shrinking margins. This could lead to price increases for clients, which need to be kept in check.
Congratulations to this public accountant. You’re free!!
Audit
Why Global ESG Audits Will Be ‘Limited’ at First: Explained [Bloomberg Law]
Most big companies operating internationally will face mandatory environmental, social and governance reporting requirements over the next few years. The earliest mandate is coming from the European Union, which will demand sustainabiity reports from all big companies, including foreign companies operating there, starting in fiscal 2024. At first the reports will have to undergo limited assurance—accuracy checks by an outside firm—but within a few years they will have to get full audits, according to Tom Seidenstein, chair of the International Auditing and Assurance Standards Board. No deadline has been set for that yet.
U.S. watchdog should step up oversight of crypto auditors, say Democratic senators [Reuters]
U.S. Democratic Senators Elizabeth Warren and Ron Wyden are calling on the country’s accounting watchdog to increase oversight of firms that audit cryptocurrency companies in the wake of the collapse of crypto exchange FTX. In a letter to the U.S. Public Company Accounting Oversight Board (PCAOB) made public on Thursday, Warren and Wyden questioned the agency, which oversees registered public accounting firms around the world, as to why auditing firms working with FTX failed to identify corporate mismanagement and the lack of internal controls that federal prosecutors have alleged. “When PCAOB-registered auditors perform sham audits – even for firms that may lay outside of the PCAOB’s jurisdiction – they tarnish the credibility of the PCAOB,” Warren and Wyden wrote.
How can auditors define material fraud? [ICAEW Insights]
What makes a fraud material? It’s not necessarily as easy a question to answer as you’d expect. If it were, we wouldn’t have conversations about the expectation gap and common misconceptions around audit and fraud from non-auditors.
