If you Google “NFL CEOs accountant,” only one name pops up: Phillips’. That’s because he served a tour of duty in Uncle Ernie’s Army before joining the Bears. From his official bio:

Phillips served as the Bears Vice President of Operations for six seasons starting in 1993.Before becoming Vice President of Operations, Phillips served as the Director of Finance from 1987-93. Phillips joined the Bears staff on September 28, 1983, as the team’s Controller, a position he held for four years.

During Phillips’ tenure as president and CEO of the Bears, the team went 180-206 (winning percentage of .466) and finished the 2022 season with a record of 3-14—the most losses in franchise history. The Bears did go to a Super Bowl under Phillips’ watch (a 29-17 loss to the Indianapolis Colts in 2007), but the team only had six total playoff appearances and three victories in his 23 years as chief executive. 

Phillips’ biggest failure was probably the $690 million renovation of Soldier Field two decades ago. Anyone who has attended a game there or has seen the stadium on TV knows that it looks like a spaceship landed on what used to be a beautiful piece of historic architecture. And Soldier Field remains the smallest stadium in the NFL with a seating capacity of 61,500. The Bears will most likely be leaving Soldier Field and building a new stadium complex in the Chicago suburb of Arlington Heights on the grounds of the former Arlington Park horse race track. And fortunately for Bears fans, Phillips won’t be anywhere near that stadium’s development.

Before Phillips announced his retirement, the Bears blog Windy City Gridiron looked back at his career and wrote:

In a league that’s evolving in how teams are managed, Chicago’s atmosphere at the top of the organization has gone stale. Considering the spike in data analytics, modern fan engagement techniques, trends in roster management and contract negotiation strategies; the McCaskeys [the family that owns the Bears] need someone who’s actively aware of these developments. A football person is needed for their chief football position, not an accountant.

Not to say Ted is a bad accountant, the Notre Dame and Northwestern Grad is well rehearsed when it comes to crunching numbers.

Alas, the point remains where a person who’s “in the know” and understands the modern game of football is truly what’s needed to get these Chicago Bears into the 21st century.

Despite being a small sample size, the answer to the question “Do ex-Big 4 accountants make good NFL team CEOs?” is a resounding …

The post Do Ex-Big 4 Accountants Make Good NFL Team CEOs? appeared first on Going Concern.

KPMG UK and the FRC had agreed upon the financial punishment last May (see below)—a £20 million fine reduced to £14.4 million to reflect KPMG’s self-reporting, cooperation, and admissions of wrongdoing. The firm also agreed to pay additional costs of £3.95 million, the FRC announced today. It’s the largest fine KPMG has received from the UK’s audit cops but not the largest fine ever doled out to an audit firm across the pond. That went to Deloitte UK in September 2020.

But what wasn’t known until today were sanctions, if any, given to five former KPMGers—Carillion lead auditor Peter Meehan; senior managers Alistair Wright, Richard Kitchen, and Adam Bennett; and junior auditor Pratik Paw—who testified during a five-week tribunal hearing in January and February, which revealed that during inspections of the Carillion audit, KPMG auditors misled the FRC by creating false documents, among other things. All five were found guilty of misconduct.

The FRC released the following summary of the tribunal’s findings today:

Regenersis AQR inspection

The Tribunal found that there had been Misconduct in respect of the Regenersis AQR [audit quality review] inspection, in that Mr Wright and Mr Bennett had:

• created or had a role in creating a false or misleading audit working paper on goodwill (“the Goodwill Paper”),
• made or had a role in the making of false or misleading representations to the AQR inspectors as to when and in what circumstances the Goodwill Paper was created,
• made false representations in the Goodwill Paper that certain audit work had been performed during the Regenersis audit.

And that in each case they were party to the deliberate misleading of the FRC’s AQR inspectors, and that their conduct was dishonest.

Carillion AQR inspection

The Tribunal found that there had been Misconduct in respect of the Carillion AQR inspection concerning minutes of year-end ‘clearance’ meetings, and an audit working paper on the selection of contracts for audit testing (the CCS Paper), that were presented to the AQR inspectors as having been created during the Carillion audit.

In respect of the meeting minutes the Tribunal found that Misconduct had been committed by Mr Meehan, Mr Wright, Mr Kitchen, Mr Bennett, and Mr Paw in that:

• Mr Wright and Mr Paw had created, and Mr Meehan, Mr Kitchen and Mr Bennett had assisted or encouraged the creation of, false or misleading meeting minutes, intending to mislead, or as a party to the deliberate misleading of, the AQR inspectors or being reckless as to whether they would be misled; and
• They had made, or connived in or were knowingly associated with making, certain false or misleading representations to the AQR inspectors as to when and in what circumstances the meeting minutes were created, intending to mislead, or as a party to the deliberate misleading of, them or being reckless as to whether they would be misled.

And that Mr Meehan, Mr Wright, Mr Kitchen, Mr Bennett were party to the dishonest misleading of the AQR inspectors. Mr Wright had already admitted these allegations, and that his conduct was dishonest.

The Tribunal found that Mr Paw, by implementing without question the instructions given to him by Mr Wright to create false minutes, acted without the integrity required of an accountant and became a party to the deliberate misleading of the AQR. However, Mr Paw was not found to have acted dishonestly.

A further allegation of Misconduct in relation to the content of the meeting minutes made by Executive Counsel against Mr Meehan, Mr Wright and Mr Kitchen was found not proved by the Tribunal.

In respect of the CCS Paper the Tribunal found that Misconduct had been committed by Mr Meehan, Mr Kitchen and Mr Bennett in that:

• Mr Kitchen had created, and Mr Meehan and Mr Bennett had assisted or encouraged the creation of a false or misleading audit working paper on the selection of construction contracts;
• They had made, or had connived in or were knowingly associated with making, false or misleading representations as to when and in what circumstances the audit working paper was created.

The Tribunal found that Mr Meehan and Mr Bennett acted without the integrity required of an accountant, but not dishonestly.  Mr Kitchen’s conduct was found to have been dishonest.

The Tribunal also found, in respect of Mr Kitchen alone, that he had made false representations in the CCS Paper that certain audit work had been performed during the Carillion audit and that his conduct was dishonest.

KPMG admitted its liability for the acts of all the individuals set out above and that those acts amounted to Misconduct.

Of the five ex-KPMG defendants, four received fines and multi-year suspensions from the profession:

• Meehan was fined £250,000 and excluded from membership of the Institute of Chartered Accountants in England and Wales for 10 years.
• Wright was fined £45,000 and excluded from membership of the Institute of Chartered Accountants in England and Wales for eight years.
• Bennett was fined £40,000 and excluded from membership of the Institute of Chartered Accountants in England and Wales for eight years.
• Kitchen was fined £30,000 and excluded from membership of the Institute of Chartered Accountants in England and Wales for seven years.

Paw only received a severe reprimand from the FRC. Another ex-KPMG auditor, Stuart Smith, who was the audit engagement partner for Regenersis, agreed to a £150,000 fine and a three-year ban from the profession as part of a settlement with the FRC in January.

[Original article below posted on May 12.]

I’m not a betting man, and that’s a good thing because, while not official yet, I would have bet my house on KPMG UK being fined more than £15 million for the whole Carillion audit fiasco.

The Financial Times reported this afternoon:

KPMG is set to be hit with its biggest-ever fine in the UK after a tribunal found that its auditors deliberately misled regulators during routine inspections of its work.

The largest fine KPMG has ever had to pay the Financial Reporting Council was £13 million last August for serious misconduct in its role in the sale of bed manufacturer Silentnight to a private equity fund.

Back to FT’s reporting:

The tribunal heard on Thursday that KPMG and the Financial Reporting Council had agreed the firm should be fined £20mn for its misconduct, but that this should be reduced to £14.4mn to reflect mitigating factors and KPMG’s admissions of wrongdoing. KPMG has also agreed to pay £4.3mn in costs.

Five individual defendants — Peter Meehan, who led the audit of collapsed government contractor Carillion; senior managers Alistair Wright, Richard Kitchen and Adam Bennett; and junior auditor Pratik Paw — were all found guilty of misconduct.

Another former KPMG auditor Stuart Smith accepted a £150,000 fine and a three-year ban from the profession as part of a settlement with the FRC in January.

The tribunal held a five-week hearing in January and February that focused not only on the major screw-ups and misconduct by KPMG and its auditors during the firm’s 2016 audit of Carillion, the construction and services company that collapsed nearly four years ago, but also failures in KPMG’s 2014 audit of Regenersis, an IT software company.

Smith, who was the audit engagement partner for Regenersis, was supposed to testify during the course of the hearing, but he got out of doing that by settling with the UK’s audit cops and accepting his punishment.

FT continued:

[The tribunal] ruled that during the inspections KPMG auditors created documents, including meeting minutes, spreadsheets and assessments of goodwill, but passed them off as having been produced before the accounts were signed off.

Summarising the tribunal’s findings, Mark Ellison QC for the FRC said Meehan, Wright, Kitchen and Bennett had “acted deliberately and dishonestly in the creation of false documents and the making of false representations” to the FRC. Paw acted without integrity but not dishonestly, the tribunal found.

The monetary amounts of the five ex-KPMG auditors’ punishments have yet to be decided. According to FT, the FRC called for Meehan to be fined £400,000 and be banned from the profession for 15 years; however, Meehan’s lawyers said he should be fined £250,000 and banned for 10 years. Wright, Kitchen, and Bennett are facing possible £100,000 fines and 12-year bans, with a 10% discount for Wright because he had admitted to some of the allegations against him. Paw, who was not yet a qualified accountant at the time, is facing a £50,000 fine and a four-year ban, FT reported.

If this all pans out, and it could be made official tomorrow, Deloitte will still hold the record for highest fine issued by the FRC at £15 million for its shoddy auditing of Autonomy, the UK-based software company that was acquired by Hewlett-Packard in 2011 and was involved in an epic accounting fraud.

We’ll update this article once the punishments are officially handed down to the Queen’s KPMG and its former auditors.

KPMG faces £14.4mn fine for misleading UK regulators over Carillion audit [Financial Times]

The post KPMG UK Somehow Won’t Be Getting a Record Fine From the Financial Reporting Council For Carillion Mess (UPDATE) appeared first on Going Concern.

Big 4 compensation season kicked off a little more than a week ago when Deloitte employees got their comp statements and then proceeded to head over to r/accounting to whip it out and show it off for all to see.

Since the last time Deloitters got their comp statements in May 2021, the firm in December bumped up base pay for employees whose salaries were below market rates. And in an attempt to keep Green Dotters from leaving the firm for greener pastures during the Great Resignation, Deloitte offered retention bonuses in its audit and tax practices.

At Deloitte & Touche, management dangled a one-time retention bonus to second-years through senior managers in audit, with the amounts varying by level ($20,000 and $35,000). Those who took the retention payment have to remain at Deloitte through the end of May 2023. If they end up leaving the firm before then, they have to pay back the bonus in full. The bonus was paid out last January. A similar deal was offered to seniors and managers in Deloitte’s tax practice last February, as those who took the one-time $20,000 retention bonus must remain loyal to the Green Dot for the next two years or pay it all back if they renege on their loyalty. Bonuses were paid out in April.

So that leads us to Deloitte’s latest round of raises. How did they compare to previous years? To find out, I examined the 2022 comp thread on Reddit, as well as both 2021 (here and here), 2020, and 2019 Deloitte comp threads on Reddit. I also went back in the archive and looked at the 2017, 2016, 2015, 2014, and 2013 comp threads on Going Concern. I made sure not to duplicate raise info from the same Redditor who posted in both 2021 comp threads. And I calculated the average raise percentage for each step up in rank or promotion where data was available (i.e, A1->A2, A2->S1, S1->S2, TC1->TC2, etc).

These averages don’t take into account factors like location/cost of living, line of service, academic degrees, scatterplot positioning, and bonuses/awards. This is just the average percentage of how much base pay increased per step up in rank/promotion.

Here they are (2022 raise percentage in bold):

A1->A2

• 14.7% (2022)
• 8.1% (2021)
• 6.6% (2020)
• 7.5% (2019)
• 5.7% (2017)
• 10% (2016)
• 5.3% (2015)
• 4.7% (2014)
• 5.6% (2013)

A2->S1

• 22.4% (2022)
• 18.6% (2021)
• 7% (2020)
• 16% (2019)
• 10% (2017)
• 14.5% (2016)
• 12.4% (2015)
• 11.6% (2014)
• 10.4% (2013)

S1->S2

• 11.6% (2022)
• 14.9% (2021)
• 0% (2020)
• 12.3% (2019)
• 7.9% (2017)
• 9% (2016)
• 12.3% (2015)
• 7% (2014)
• 6.8% (2013)

S2->S3

• 14.1% (2022)
• 10.5% (2021)
• 0% (2020)
• 11.8% (2019)
• 8.4% (2017)
• N/A (2016)
• 7.2% (2015)
• 9.8% (2014)
• 7.7% (2013)

S3->M1

• 20.1% (2022)
• 20.7% (2021)
• 5.9% (2020)
• 27.5% (2019)
• 13% (2017)
• N/A (2016)
• 14.1% (2015; only one entry)
• 13.5% (2014)
• 16.2% (2013)

M1->M2

• 11% (2022)
• 13.2% (2021)
• 0% (2020)
• N/A (2019)
• N/A (2017)
• 8% (2016; only one entry)
• N/A (2015)
• 5% (2014)
• N/A (2013)

M2->M3

• 13.3% (2022)
• 9.3% (2021)
• 0% (2020)
• 11% (2019)
• N/A (2017)
• 5% (2016; only one entry)
• N/A (2015)
• N/A (2014)
• N/A (2013)

TC1->TC2

• 16.9% (2022)
• 6.2% (2021)
• 2.5% (2020)
• 9.3% (2019)
• 5% (2017)
• 8.5% (2016)
• N/A (2015)
• N/A (2014)
• N/A (2013)

TC2->SC1

• 18.4% (2022)
• 14.9% (2021)
• 1.7% (2020)
• 17.5% (2019)
• 12.5% (2017)
• 11.8% (2016)
• 11.2% (2015; only one entry)
• 12.1% (2014; only one entry)
• N/A (2013)

SC1->SC2

• 24.6% (2022)
• N/A (2021)
• N/A (2020)
• 4.5% (2019)
• N/A% (2017)
• 12% (2016; only one entry)
• N/A (2015)
• N/A (2014)
• 3.7% (2013)

SC2->SC3

• N/A (2022)
• N/A (2021)
• N/A (2020)
• 12% (2019)
• N/A% (2017)
• 4% (2016; only one entry)
• N/A (2015)
• N/A (2014)
• 4.1% (2013; only one entry)

M3->SM1

• 22.4% (2022)
• N/A (2021)
• N/A (2020)
• 7% (2019)
• N/A% (2017)
• 14% (2016; only one entry)
• N/A (2015)
• N/A (2014)
• 13% (2013; only one entry)

M4->SM1

• 19.3% (2022)
• N/A (2021)
• N/A (2020)
• N/A (2019)
• N/A% (2017)
• N/A (2016)
• N/A (2015)
• N/A (2014)
• N/A (2013)

SM1->SM2

• 13% (2022; only one entry)
• 10% (2021)
• N/A (2020)
• N/A (2019)
• N/A (2017)
• N/A (2016)
• N/A (2015)
• N/A (2014)
• N/A (2013)

SM2->SM3

• N/A (2022)
• 7% (2021)
• N/A (2020)
• N/A (2019)
• N/A (2017)
• N/A (2016)
• N/A (2015)
• N/A (2014)
• N/A (2013)

It looks like second-year associates and first-year seniors were among the biggest winners. Managers didn’t do too badly either. Anything else stand out? Let us know in the comment section.

The post Compensation Watch ’22: Deloitte Lifts the Lid on Raises (UPDATED) appeared first on Going Concern.

One thing I have learned since IRS Criminal Investigation and the Justice Department conducted a court-ordered raid of Alliantgroup’s Houston offices on May 20 is that there are A LOT of horror stories from ex-Ag employees about their experience working at the management and tax consulting firm. If you have the time, check out these threads, posted after the raid went down, on Fishbowl, r/Houston, and from a former Alliantgroup employee on Twitter.

As a website that has lurked in the shadows of the public accounting industry for nearly 13 years, we’ve seen and heard our fair share of stories about how toxic, uncomfortable, and cult-ish working at a Big 4 firm and other top mid-tier firms can be. So it’s interesting to read and hear about the gory details from former and current Alliantgroup employees of what it’s like working at a well-known non-accounting firm that sits on the periphery of the accounting profession.

And then there’s the Houston Press article from 2017 that detailed allegations of sexual harassment against Alliantgroup co-founder and CEO Dhaval Jadav (a former Deloitte & Touche grunt BTW) and other male employees, the twice-annual late-night office parties Jadav calls “raves,” the cult-like devotion management asks of its employees (they must be “raving fans” of Alliantgroup), and how sue-happy Jadav is against people and clients that wrong him.

Going Concern has always been a safe space for public accountants to sound off anonymously about what it’s REALLY like to work in PA. We’ve given four former and one current Alliantgroup employees a safe space here to talk about what it was/is like for them to work at the “blue A.”

They “stole a great deal of the joy of my pregnancy”

[NEW] This former Alliantgroup employee explains her uniquely awful experience working at the firm.

I started working at Alliantgroup when I was 22. Since I was just recently out of college, I laughed off/ignored a lot of things that should have been major red flags, like one of my team members (who is now a vice president as well as the CEO of Alliantgroup’s cybersecurity company) taking me out to lunch my first week and asking me if I’d ever had a lesbian experience. Sexual harassment/discrimination and racism were very much part of the day-to-day culture.

Over time, as others have said, Alliantgroup slowly took over more and more of my life, alienating me from my family and previous friend group because I was simply always at work. Because my entire social life revolved around the company, I eventually began a relationship with a coworker. At the time I was still an associate, and the man who became my husband was the director of implementation.

Obviously this made the relationship problematic, but we were committed, so we kept it under wraps as long as possible at work while we tried to straighten out the personal side of things. Eventually the secret came out and my now-husband was demoted from his position. Honestly, this was a fair decision considering the role imbalance between us at the time, but the worst part was the owners and senior leadership implying to him that I had perhaps intentionally entrapped him into a relationship with the goal of filing a sexual harassment lawsuit against the company. I did, and still do, find that a deeply misogynistic point of view that is indicative of the company’s attitude toward women in general.

About a year later, we decided to have a child together and I quickly got pregnant. When I told management, they were … not supportive. Still feeling like I was masterminding some sort of legal plot, a plan was quickly hatched to banish me not just from the office, but from public life entirely. I was given the “option” of terminating my employment and working from home as a contractor, during which time Alliantgroup would pay my COBRA premiums for 18 months as long as I agreed to release them from any legal liability. It was also heavily implied that my husband’s employment would be in jeopardy if anyone from the office found out I was pregnant. Given that my choice was to accept their offer or possibly get us both terminated with nothing, I agreed. I later found out that while they were selling me on this idea, there was at least one conversation where one of the owners tried to convince my husband to pressure me into an abortion (which, of course, he refused).

I lost almost my entire local support network overnight and lived in fear of any of my former coworkers seeing me pregnant, to the point I rarely left my house. I couldn’t see my friends at the company, and of course I was subject to the shunning ritual that pressured them not to reach out to me either. Alliantgroup managed to steal a great deal of the joy of my pregnancy by making my very existence feel like a dirty secret.

When my son was five months old, I decided to go back to work (Ag had terminated my contract work earlier than agreed, although they did continue paying my COBRA premiums). My husband still worked for Ag, so they agreed to let me come back as an employee because they didn’t want me going to work for a competitor. I was promised I would retain my previous position, but I came back to an effective demotion. My title and salary were the same, but whereas I had been a well-reviewed team leader of an industry group before, I was now given the role of an entry-level associate and faced ever-moving goalposts for how I could “earn” my way back to my previous status. The worst part was, they referred to my absence casually as my “maternity leave,” as if it was a generous benefit they had offered me instead of a stressful isolation they’d basically threatened me into. Had my period of non-employment actually been a maternity leave, I’m pretty sure my demotion would have been illegal.

I was gaslit for months about the reasons I was not being given my team back, culminating in a conversation with my new team lead (my former team member who was curious about my lesbian tendencies) in which I was told the reason I could no longer be in management was that I could no longer attend the evening leadership meetings because of my daycare schedule, and switching off with my husband was not an option because he was still more important in the organization than me. Trying to give him an out for what was clearly an inappropriate conversation, I told him it sounded like I was being told to choose between being a mother and being in leadership, and his response was, “Choose.”

At that point, I tried to start recording audio on my phone, but he saw what I was doing and ended the conversation. I was then called into another director’s glass office for damage control, during which my team lead denied to my face having said what he said. No action was taken, and they eventually contrived a way to push me out entirely the week before they relocated to the new office. Best to get rid of what doesn’t spark joy before a big move, I guess!

“Absolute BS” billing practices

One former Alliantgroup employee, who worked at the firm for four years, told us more about its historically shady billing practices, which he/she said are “absolute BS.” (You can read more about this in our article about the raid.) This ex-House of Jadav employee also called Alliantgroup “an evil, toxic, emotionally damaging company.”

When we brought on the ERC (employee retention credit) services, my team was offered our biggest quarterly bonus EVER, which we could earn only by billing 1,000 billable hours for the quarter. I’ll say that again: 1,000 billable hours per person for one quarter (three months, 12 weeks, 60 days).

The company has its employees working a minimum of 10-hour days Monday through Friday (typically more during tax season, plus weekend work as well). At 10 hours a day on average for about 60 days in a quarter, the math adds up to about 600 hours of working hours possible in a quarter. How does that add up, you might ask? Well, it simply doesn’t.

We were taught to bill in 15-minute increments and were told to round up if we went over the 15-minute increment. So say we had a phone conversation with a client that lasted 32 minutes, we would be told to bill for the 45-minute increment rather than 30. If you had a five-minute conversation with a co-worker about the client file you worked on, bill 15 minutes toward that client’s file. I would literally spend anywhere from five to 10 extra hours a week, on top of my 50-hour workweek, billing time into our time-tracking system to try to get my bonus.

It was absolutely ridiculous and 100% to take as much money out of our clients’ pockets as possible. The saddest part is that most of the clients we served never asked for billing details and never knew how badly the company was taking advantage of them. Most of these clients were actually in serious need of the credits because they were small businesses. They trusted the company’s billing practices and fees. I still feel sick about it to this day when I think about some of the wonderful clients I worked with and how we treated them when it came to “paying for our services.”

The company made it seem OK that they were billing their clients so much because they would make themselves look like heroes by finding them this incredible amount of money in credits. The company loves to hide behind that heroic prophecy of saving companies billions, when in reality it’s completely motivated by greed. But I was a salaried employee who would have made much more than my salary had I been paid hourly and collected overtime. We were always understaffed for the amount of work that was asked of us. At one point in time I was a project manager for two service lines and managing a total of 500 client files completely on my own. Yes, I was expected to single-handedly deliver tax credits to 500 different clients in one year while only getting help from one other individual who I shared with three other project managers on my team.

So I did whatever I could to feel compensated for the insane amount of work that I was held accountable for and ultimately the sacrifice of giving up my personal life. The company treats most of its employees like garbage. I cried every week because I was so miserable. And yes the company’s higher-up individuals—that 1%—made exponentially more money than the team they managed that actually did all of the hard work.

We all received an email right before Thanksgiving 2020 in the middle of the pandemic announcing a certain employee’s bonus for the quarter. That was another thing they liked to do, flaunt certain (ass kissing) individuals’ incredible bonuses to incentivize the little people to work harder so they could one day obtain that type of bonus too. Typically, after each corporate tax season in April and October, the company would throw insane rave parties as a thank you for the employees’ hard work through tax season. Additionally, every year the company hosted an extremely extravagant Christmas party for its employees.

These events included costly items such as DJs, rented venues, five-star catered meals, open bars, and plenty of Wolf of Wall Street cash-throwing extravaganzas (if you’re picking up what I’m putting down). Because the COVID-19 pandemic was at its height in 2020, none of these three annual events could take place. Therefore most employees hoped that the company would compensate them for their hard work via a simple holiday bonus check. WRONG. We got nothing. Absolutely nothing. Not even a Domino’s gift card.

This brings me back to the email that was sent by the CEO, Mr. Jadav, regarding this one employee’s bonus right before Thanksgiving. This person received a $40,000 bonus for his “raving fan achievement.” This was the salary I started with when I began my role at the company. It was an absolute slap in the face, and at that moment in time I knew I needed out of the company as soon as possible.

With all this being said, on behalf of all former Alliantgroup employees, I would kindly like to ask for a bowl of popcorn to snack on while we watch karma finally catch up to this evil, toxic, emotionally damaging company. And yes I mean movie theater style, not microwaved.

“The most abusive relationship I have ever been in”

This former Alliantgroup employee told us that their experience working at the firm “haunts me in my daily activities, interferes with my work at my current job, intrudes on my thoughts in my downtime, and affects my view of the way the world works.”

Although time has passed and I am now immersed in a successful career within the industry I specialize in, my time at Alliantgroup haunts me in my daily activities, interferes with my work at my current job, intrudes on my thoughts in my downtime, and affects my view of the way the world works. This company preys on those desperate for a chance at success, too often naïve college graduates with no idea of the horrors they are walking into.

I survived for two years within the glass corridors of the 20-floored building, home to one of the most deceitful and manipulative tax firms in the United States. During that time, my every move was constantly monitored. I was pulled into conference room after conference room to discuss my reasoning behind taking a lunch off-desk, off-site. My laptop powered itself on in the middle of the night once; I left it in the trunk of my car every evening thereafter.

Myself, along with co-workers, were asked to document our peers who were not “culturally aligned” and discuss their actions in meetings with upper management as part of our grooming if we wanted to be promoted. For those of us content within our current roles, the widespread mantra was “get promoted or get out!” Your career journey with Alliantgroup is not under your own control—rather, you are at their mercy for how they choose best to use you (or in most cases, what you’re willing to do for them to make it to the top).

The same year I started with Alliantgroup, a news article began to spread flaunting accusations of sexual harassment against the CEO Dhaval Jadav. Within this article, multiple employees came forward with accusations of similar behavior within the company, and others began to whistleblow on the illegal billing activity occurring within multiple departments. While Alliantgroup’s managers made sure to shut down any on-desk conversations about the article, this was the first time both current and former employees had a win at exposing the dirty secrets hidden behind Alliantgroup’s closed doors. The saddest part? It is all true.

Employees who are even suspected of being disloyal to Dhaval or the business are called to the 16th floor to be dismissed. In this room, you are forced to sign an NDA to receive severance, and are escorted from the building and have your personal items shipped to you at a later time. This NDA, of course, is to protect the company against employees who witnessed things such as illegal billing practices on the floor. For example, during my employment, several clients requested an itemized breakdown of the hours billed and the work completed to reach those hours. In all instances, my managers and client relations directed the project team to back out hours of work completed, and reassign the hours to a different task within the project. Quality control and client relations would review the new itemized billing breakdown and, after a series of edits, would return it to the client. Discounts on future years’ tax services were offered to clients who continued to raise red flags. Those red flags were either quickly withdrawn or silenced by CPAs simply choosing to do business elsewhere.

While I am privy to many other things I unfortunately witnessed within those walls, I think the biggest takeaway from Alliantgroup is the trauma. The amount of gaslighting, manipulation, privacy violations, and stripping of your own professional dignity that occurs every single day to employee after employee is purely wrong. There is no one to submit a formal compliant to. You are simply stuck in the aftermath that Alliantgroup creates for you—for me, it was months of unemployment at first. After eventually finding my new home, it was years of therapy—both professionally and personally. It was the constant fear of being watched over my shoulder at work, when all that was behind me was a supportive new team. It was living in constant irrational fear of being fired in my next job or being a failure and, saddest of all, the desire to end my life at times. Truly, the most abusive relationship I have ever been in was with my former employer, and I feel very grateful to have not only escaped, but found a loving professional home where I can thrive.

Seeing the news of the IRS raid on their building last week brought me to my knees with tears. My phone blew up with texts and calls from former colleagues, family, and friends all familiar with Alliantgroup’s reputation—an army of survivors all standing together to witness what we hope to be the first domino to fall against them.

What’s up with Zerbe, Miller, Fingeret, Frank & Jadav?

Another former Alliantgroup employee who reached out to us made mention of the law firm ZMFF&J, which has offices on the 17th floor of the Houston building where Alliantgroup is headquartered. According to its website, ZMFF&J specializes in tax planning and litigation. “We represent individuals and companies that are under audit or examination by the IRS or state tax authorities. We currently assist businesses and individuals ranging from small businesses to Fortune 500 companies,” the website says.

The people who make up the ZMFF&J in the firm’s name are:

• Dean Zerbe, partner; national managing director at Alliantgroup and former senior counsel and tax counsel for Senate Finance Committee Chairman Charles Grassley (R-IA) from 2001 to 2008;
• Steven Miller, national director of tax at Alliantgroup and former acting IRS commissioner;
• Jeremy Fingeret, partner; chief quality officer at Alliantgroup;
• Shane Frank, partner; chief risk officer and co-founder of Alliantgroup; and
• Dhaval Jadav, partner; co-founder and CEO of Alliantgroup.

This former Alliantgroup employee, who worked for the company for four years, also worked for ZMFF&J and told us:

Alliantgroup forces their employees to bill more than 24 hours a day. They also have a firm called ZMFF&J that is supposed to legally (for multiple reasons) be an entirely separate entity … but it isn’t. Every single employee of ZMFF&J has never received a paycheck from ZMFF&J because they are all employees of Alliantgroup. It’s located on the 17th floor and only consists of Alliantgroup employees. I was a part of ZMFF&J. I asked one of the ZMFF&J partners, who is an unapologetically horrible human being, “How do I explain to people how ZMFF&J is separate from Alliantgroup?” His response was, “Why would you need to explain that to anyone?” As if people who start working at the company don’t immediately become curious as to why they have an imaginary law firm on the 17th floor.

Coincidence? Maybe. Maybe not

A current Alliantgroup employee told us that overbilling clients is still rampant but the company just last week changed its billing practices to be less arbitrary. Then the IRS came-a-calling later in the week. Coincidence?

Overbilling is rampant and they actually tried cutting down on it. I don’t know if it was coincidental that the IRS just so happened to stop in the same week the company started to go backward on the billing, but the way we’ve been billing clients has been notoriously known for more than a year and it has been prevalent among older employees. So then this sudden shift acting as if this wasn’t a thing already happening is kind of off, right?

Work environment: Whenever there would be promotions, they would band everyone together, publicize who was getting promoted, and tell people, “Hey, this could be you,” and then afterward there would be treats, drinks—sometimes alcohol if it was on a Friday. We haven’t had a promo meet-up in a minute because last time we did it, they told us we could go home immediately after and they got pissed off when we didn’t stay to talk to the people who got promoted, even though the people who got promoted left as soon as that promotion meeting was over. So the following week, we were all spoken to by our leads, most likely sent in by our director, to ask us why we didn’t stay, that it looked unprofessional, that this could be an opportunity for us to want to grow. But for the people who aren’t interested in growing, why would you reprimand them for leaving after being instructed to?

There’s more to this company, like mandatory 10-hour shifts but PTO is only eight hours.

In the past two months, there have been sexual harassment stories brought up to our HR department. Those were promptly ignored with one of the girls quitting because it got hushed down BY HR. The other one regarded a woman being fired for “provocative attire” despite complaining to HR about the harassment and uncomfortable work environment.

There was a heavy emphasis on staff to buy diapers for a big baby shower celebrated for a lead. If you chose not to partake in this, you were shunned. If you did buy diapers, you could essentially join the baby shower, in the middle of the workday, and blow off work. If you didn’t, you had to stay at your desk and continue working.

About a month or two ago, a man fainted on the 15th floor. What happened? I’m unsure, but from personal experience, that’s where the DART director sits. This is where entry-level employees sat before a big migration between the 15th and 18th floors. The 15th floor has very warm temperatures, and you are watched and clocked if you are gone from your seat for too long. Effectively hostile, discouraging employees from taking breaks to avoid “falling from grace” of department heads.

Honestly the amount of money this company can afford to throw around is a red flag. There was a structure where if you recommended someone into the company, both you and the new entry to the Ag cult would receive $1,000+ within the first three days they start. If they stay around for their sixth month, the person who referred them would receive $10,000. This poster was plastered all around the building to incentivize hiring with the large turnover rates.

If any other former or current Alliantgroup employees want to share their experiences working for the firm, get in touch with us using the contact info below. All submissions will be kept anonymous.

At Alliantgroup, Sexting, Racist Emails and Harassment Were S.O.P., Ex-Employees Charge [Houston Press]

Related article:

The IRS Is Paying an Unwelcome Visit to Alliantgroup

The post Former and Current Alliantgroup Employees Speak Out About ‘Evil, Toxic, Emotionally Damaging Company’ (NEW UPDATE) appeared first on Going Concern.

One law expert, Linda Galler of Hofstra University’s Maurice A. Deane School of Law, said seeing the feds conduct a search warrant of your offices would be Alliantgroup’s “worst nightmare” because that type of thing doesn’t happen too often at legitimate businesses. Aaron Esman, a tax controversy and litigation attorney at Moore Tax Law Group, called it “very rare” for IRS-CI to become involved if there wasn’t some kind of targeted information investigators were trying to get their hands on. The article states:

Although CI regularly investigates smaller entities, “a raid in and of itself … is rather rare for an entity of this size,” he said. “This is not exactly a common scenario.”

A search warrant was needed for the government to raid Alliantgroup’s Houston headquarters on May 20. If any charges result, it would be a criminal prosecution, Steve R. Johnson of Florida State University’s College of Law told Tax Notes. He added that the government has two primary ways of developing information in a criminal tax case: IRS-CI can build a case, interview witnesses, issue summonses, and so forth, or it can move the case forward via a grand jury, both to indict or to investigate. In complex cases, a grand jury is the preferred option, he said. In the Alliantgroup situation, the search warrant was most likely issued in support of a grand jury investigation, Johnson said. However, he told Tax Notes that it’s possible no indictments will result from the investigation.

A source who works at Alliantgroup told Going Concern recently that a grand jury hearing related to the raid could be held as early as tomorrow at the federal courthouse in downtown Houston. The Ag employee said multiple Alliantgroup clients have received subpoenas asking for their testimony.

The Tax Notes article goes on to explain the process for IRS-CI to obtain a search warrant, what criteria the Justice Department would need to consider before bringing criminal charges against a company and/or individual(s), and why employees who might be involved in the underlying issue being investigated should probably lawyer up.

One interesting part of the article looks at why a company like Alliantgroup would be on thinner ice with the government than, say, a Big 4 firm, especially after what happened with Arthur Andersen:

After the Enron Corp. scandal blew up in 2001, the government focused its attention on Arthur Andersen LLP — one of the Big Five accounting firms at the time — and the firm was eventually criminally charged and began winding down its business. “Once an accounting firm that does auditing work is publicly charged with a crime, you can’t go to them,” Galler said.

The Supreme Court reversed the firm’s conviction in 2005, but by that point, the damage to the firm’s reputation had already been done and it never recovered. In the aftermath, the rumor on the street was that the government was now reluctant to charge a public accounting firm with a crime because those firms serve an important function in the public markets. Bringing down another major public accounting firm by tarnishing the firm’s reputation via criminal charges could have economywide ripple effects and was thus frowned upon, Galler said.

But Alliantgroup is not a public accounting firm — it’s a private tax advisory firm, albeit a large one with offices nationwide, so it doesn’t have that same public interest defense in its favor, Galler continued. “So here, you could certainly have the firm charged, if it seems appropriate to those who are making decisions on this, or there could be individuals charged.”

We will continue to update this article as new information about IRS-CI’s raid of Alliantgroup emerges.

Alliantgroup’s ‘Nightmare’ Probe by IRS Is Only Just Beginning [Tax Notes]

Related article:

We Could Soon Know the Results (If Any) of the Feds’ Raid of Alliantgroup

[UPDATE 12] Alliantgroup co-founder and CEO Dhaval Jadav, who apparently hasn’t been at work since the IRS and the FBI raided his business’s Houston headquarters last Friday morning, sent an email to all Ag employees at about 10:20 p.m. on May 25 with the subject line: To Our alliantgroup Family.

Several sources have sent us the email from Jadav, which said:

Hi everyone!

A BIG THANK YOU to all of you for continuing to serve our clients and creating Raving Fans – I appreciate all of you so much !

We’ve had a tough couple of days – but I love seeing our alliantgroup family pull together !

It remains vital that we serve our clients and provide quality work. I will not sleep until I know that our clients are being well taken care of … and most importantly, I will not sleep until I know that the lifeblood of our firm – ALL OF YOU, OUR WONDERFUL PROFESSIONALS – are being well taken care of ! If there is ANYTHING I can do for you, please don’t hesitate to ask ! I am forever at your service …

Please feel free to take a half day off this Friday and get an early start to your Memorial Day Weekend ! Everyone be safe and have a great long weekend!!

Dhaval R. Jadav
Chief Executive Officer

First, somebody please tell Dhaval that he doesn’t have to put a space in between the word and the exclamation point. And second, how can he be “forever at your service” when he hasn’t shown his face there since his company got raided by federal authorities? How leaderly of him.

Anyhoo, some of the responses to Jadav’s email are pretty cringey and put the “cult” in Alliantgroup’s culture.

I know many of you in public accounting work with colleagues who are just like these two Kool-Aid guzzlers at Alliantgroup.

[UPDATE 11] Alliantgroup employees in Houston returned to work on Tuesday morning after they were sent home early Friday following the court-ordered raid of their office on May 20. Thanks to a tipster, here is the email they received Sunday evening from Kim Allen, senior director of talent:

Our tipster commented: “This reads like a high school principal applauding her seniors for being orderly at graduation.”

[UPDATE 10] Here is a statement Alliantgroup gave to the Houston Chronicle regarding the court-ordered raid by IRS-CI and the FBI of its Houston offices on Friday morning:

“We look forward to understanding the government’s queries and we are fully cooperating with them. We expect that when the complete facts are known, this matter will be amicably resolved.”

[UPDATE 9] An attorney who worked for a competitor of Alliantgroup for more than a decade sent us a document of court cases in Harris County, TX—the county Houston is in—involving Ag from 2005 to March 2022. Let’s just say the consulting firm has kept its lawyers busy for a LONG time. The attorney who contacted us said:

They have a reputation for poorly defending their shoddy work on audit which resulted in a lot of unhappy clients over the years. The clients claiming credits generated by Alliantgroup would end up owing penalties and interest on top of having to repay the credits – because the IRS often denied the credits in full. From the attached publicly available information, it’s somewhat easy to infer that many clients refused to pay Alliantgroup and ended up in a lawsuit because of it.

You will notice that the majority of these cases were from pre-2012. After 2012, Alliantgroup evidently chose to change their tactics a bit after this list was used in marketing material by an Alliantgroup competitor and word got out that they had a habit of suing their clients.

You will note that the majority of cases initiated by them are Breach of Contract (against former clients) or tortious interference (against former employees).

[UPDATE 8] A tipster made us aware of a photo posted on Instagram Friday evening by Alliantgroup co-founder and CEO Dhaval Jadav who wined and dined some of his troops at Songkran Thai Kitchen in Houston. But Jadav is not in the photo, for whatever that’s worth. Even though his business was raided by federal authorities earlier in the day, Jadav “apparently does not have a care in the world,” our tipster commented. [Jadav has since deleted this photo from his Instagram, and Alliantgroup has taken down its Instagram page.]

[UPDATE 7] As of 8:35 p.m. CT, still no word from the FBI and IRS on why they raided Alliantgroup’s Houston offices this morning. But we do know Alliantgroup isn’t a fan of our reporting:

[UPDATE 6] After seeing the last update we posted, we got a call a little after 4:40 p.m. CT from a CPA who used to work for a firm that partnered with Alliantgroup in terms of a referral relationship and this person said Alliantgroup “is so f’n dirty.”

They get these huge credit numbers for clients so as an advisor you like that part. But they fee cap anywhere between 25% and 35%, is what I’ve seen. It does depend; you can negotiate. But when you get a client that gets pissed off about the bill and they ask for hours detail, the hourly rates you’ll see on some of these people will blow your mind in how they get to the fee cap. They never have missed a fee cap. They’ll work with a client for a decade, and eventually you’ll build efficiencies on things like this. Not them. And I get it, it’s the game. I wish as a CPA I could bill based on refunds.

The CPA ended his call by saying, “They fucking suck.”

[UPDATE 5] Not sure if this is pertinent as to why the FBI and IRS raided Alliantgroup’s offices in Houston this morning, but one Alliantgroup employee who contacted us earlier today said the firm’s billing practices are unfair to its clients:

For most clients there is a 35% fee cap for our services. Employees are incentivized to use this entire amount up. There is a company-wide culture of overbilling clients.

The culture is awful, I’m sure you have read Glassdoor reviews, the ones I’ve read are all true.

For the employee retention credit department of the company, things are a mess.

Turnover is extremely high (in every other department as well), and employees are promoted to being project managers very quickly despite not having much experience.

Hmmm, that last part about turnover sounds familiar to what is happening in public accounting these days. Anyway, back to our tipster:

They also offer generous referral bonuses to entice people to join this department. I believe $15,000 if the employee you refer stays 6 months, maybe a year. For my department it’s $500 for staying 6 months.

The employee then sent us this screenshot of the amounts offered in Alliantgroup’s referral bonus program:

And it just so happens that two former IRS commissioners serve on Alliantgroup’s Strategic Advisory Board: Mark Everson and Steven Miller. Also, two former commissioners of the IRS Small Business/Self-Employed Division, Eric Hylton and Kathy Petronchak, sit on the board.

[UPDATE 4] The ABC affiliate in Houston reported just before 2 p.m. CT that Houston field office FBI agents at the scene confirmed the IRS field investigations team was conducting a court-ordered criminal investigation at the building that houses Alliantgroup’s offices. No arrests have been made as of now.

[UPDATE 3] We heard from another Alliantgroup employee at about 1:40 p.m. CT who sent us photos and told us about what he/she saw as the IRS raid was going down this morning:

We were all escorted out 10 at a time and told our servers were being confiscated.

We were asked not to discuss the matter because we could be deemed as witnesses.

When we asked for a search warrant, I was told by a fed “it’s in my pocket.” No it wasn’t. I saw his pocket. It looked flat and empty.

Another employee asked about allegations and they changed the subject.

[UPDATE 2] We have not been able to confirm this, but a lawyer in Texas who is a former Alliantgroup employee speculated on Twitter that the IRS raid at the firm this morning has to do with a lawsuit filed against it in 2019 regarding 179D tax deductions:

I’m hearing that the IRS Criminal Investigation raid on alliantgroup allegedly has to do with the 179D racketeering lawsuits filed years ago. Pending confirmation. /14 https://t.co/wTqKwk9JSa

— Leann (@LAFinTexas) May 20, 2022

And here is a video someone posted to Twitter of IRS-CI agents seizing laptops:

https://twitter.com/MichelleLinBall/status/1527713417359917058

[UPDATE 1] We heard from an Alliantgroup employee who told us this at about 12:30 p.m. CT:

Employees on my floor were put into a conference room and told to wait while they looked through the floor. They said they had a warrant for floors 15 through 20 which is all but one of the floors we work on (the only other floor is used for storage mostly). They allowed us to grab whatever we wanted and go back into the conference room, then we were escorted out of the building. They said we cannot use the company server in any way, including Outlook or teams. We did grab our work laptops before going home. It was very surreal.

Here’s the original tip we received a little after 11:34 a.m. CT:

The Houston headquarters of the R&D tax credit consulting firm Alliantgroup is getting raided by the IRS.

Not the first time these guys have been in hot water.

This is all we know right now. We’ll update this post once we get more information about what’s going down over there.

The post The IRS Is Paying an Unwelcome Visit to Alliantgroup (NEW UPDATE) Experts Weigh In On Feds’ Raid of the ‘Blue A’ appeared first on Going Concern.

We have been unable to confirm this so far, but rumor has it a grand jury hearing will be held at the federal courthouse in downtown Houston on June 23 related to the raid. A source who works at Alliantgroup and wished to remain anonymous told us that multiple Alliantgroup clients received subpoenas asking for their testimony.

We were told that the grand jury hearing will determine whether the evidence the IRS has on any possible wrongdoing by Alliantgroup merits criminal charges being filed. The source said what those charges could be is anyone’s guess at this point. And if the hearing doesn’t go as planned for the government, we may never find out why the raid was conducted. But it the hearing does go well for the government, our source said, “We’ll all find out if charges will be filed that day or very soon after.”

There has been speculation that the raid was connected to a lawsuit filed against Alliantgroup in 2019 regarding 179D tax deductions. But our source shot that down, saying that particular lawsuit was resolved.

That’s all we know at this point. If anyone can shed any more light on this possible grand jury hearing next week, get in touch with us using the contact info below. All tipsters will be kept anonymous.

Related articles:

The IRS Is Paying an Unwelcome Visit to Alliantgroup
Former and Current Alliantgroup Employees Speak Out About ‘Evil, Toxic, Emotionally Damaging Company’
Alliantgroup Is Considering Retention Bonuses to Keep People From Fleeing

The post We Could Soon Know the Results (If Any) of the Feds’ Raid of Alliantgroup appeared first on Going Concern.

Much like at the biggest public accounting firms in the US, the Great Resignation has hit Alliantgroup hard over the last year or two, as employees have left the House of Jadav for greener pastures, more money, and a less toxic work environment. And now that the Houston-based national tax consulting firm is under investigation by federal authorities, more current Alliantgroup employees are planning their escape.

On May 24, the day Alliantgroup employees returned to work in Houston after being given the day off on May 23 and a half-day on May 20 following federal authorities raiding the firm’s offices that morning, one current employee told us:

Despite returning to work today, we are all pursuing employment elsewhere.

Sensing a possible mass exodus because of what happened at the company more than a week ago, a source told us on May 28 that Alliantgroup has already begun the process of offering employees retention bonuses to entice them to stick around a little longer:

They’re beginning to offer some employees retention bonuses with terms of staying over 12 months. Contracts are currently being drafted and will be handed out some time next week.

Firms offering employees retention bonuses is not unheard of during the Great Resignation, at least in public accounting. Last February Deloitte’s tax practice offered seniors and managers a one-time lump-sum payment of $20,000 if they agreed to stay with the Big 4 firm for the next two years. Those who took the money received their retention bonus in April. A similar one-time bonus was offered last October to second-years through senior managers at Deloitte & Touche, Deloitte’s audit practice. Amounts of the bonus varied by level (either $20,000 or $35,000) and were paid out on Jan. 7. Deloitters in audit who took the lump-sum payment now have to stay through the end of May 2023. In both instances (tax and audit), if Deloitte employees who took the retention bonus leave the firm before the terms of the agreement expire, they have to pay the bonus back to the firm in full.

The biggest difference between Deloitte’s and Alliantgroup’s situations is that Deloitte is not under investigation by the feds. We’ll update this article once we know how much of a retention bonus Alliantgroup is offering employees.

[UPDATE] Apparently Alliantgroup has been offering employees retention payments for at least the past year, according to a current employee. This person told us that the retention bonuses are normally $10,000, and if the recipient takes it, he or she must stick around for 12 months. If the employee bolts Alliantgroup before the contract is over, he or she must pay the bonus back in full. Our source told us that the company “has definitely given retention bonuses that were more than $10,000,” but the employee is unaware of any that were less than 10K and has not heard of retention bonuses being offered that were shorter or longer than a 12-month term. The retention bonuses “are used primarily as a tool for determining if somebody has immediate plans of leaving,” the employee said.

The retention agreement contract has a nondisclosure agreement-type clause, according to our source, and only the company’s very top executives can offer employees retention bonuses. The employee told us that he/she has not heard of anyone getting or being offered a retention bonus since Alliantgroup’s offices were raided on May 20.

Related articles:

The IRS Is Paying an Unwelcome Visit to Alliantgroup
Former and Current Alliantgroup Employees Speak Out About ‘Evil, Toxic, Emotionally Damaging Company’

The post Alliantgroup Is Considering Retention Bonuses to Keep People From Fleeing (UPDATE) appeared first on Going Concern.

We now know the reason, courtesy of the Financial Times, why Kelly Grier decided not to seek a second term as EY US chair and managing partner and Americas managing partner. Apparently there’s no love lost between her and Carmine Di Sibio, EY global chairman and CEO.

FT reported today:

The head of EY’s US business quit the big four accounting firm after a power struggle with its global boss, underlining the tensions between the group’s competing fiefdoms as it considers a radical plan to break itself up.

Kelly Grier, the first woman to lead EY in the US, clashed with global chief executive Carmine Di Sibio over the influence her business should wield within the firm’s international operations, said four people familiar with the matter.

The two also disagreed over how much the US firm, by far the biggest in EY’s international operations, should pay to fund EY Global, the people added.

The article states the tension between Grier and Di Sibio started well before the accounting world learned last week about EY possibly splitting its audit and advisory businesses worldwide so there would be no conflicts of interest between the auditing and consulting services the firm provides to clients. If that were to happen, and it’s far from a done deal (it would have to be voted on and approved by EY partners across the globe), two giant professional services firms would be created. One would most likely keep the EY name and the other would get a new name. Synerage, anyone?

FT reported that Grier was seen as a contender to replace Di Sibio as global chair and CEO when his first four-year term ends in June 2023. But …

Grier — also EY’s chair and managing partner of the Americas region, the largest of its three geographical segments — overplayed her hand in trying to position herself as Di Sibio’s successor, said some of the people with knowledge of the tensions between the pair.

“She flew too close to the sun and got her wings burnt,” said one.

Di Sibio remains “well-connected to the US partnership”, meaning Grier may have struggled to win re-election [as EY US chair and managing partner] had she put herself forward, said another person briefed on the matter.

Two ex-EY employees who recently left the firm told me today that neither knew of any kind of quarrel between Grier and Di Sibio, but both basically said the same thing: it gives more context as to why Grier decided not to seek another term.

Grier’s term officially ends on June 30. Julie Boland, current EY vice chair and managing partner of the firm’s Central Region, will succeed Grier beginning July 1.

EY’s US boss quits after clashing with global chief of Big Four firm [Financial Times]

Related article:

EY US Chair Kelly Grier Will Not Seek a Second Term

The post You Know Things Are Bad at EY When Its US and Global CEOs Are Beefing appeared first on Going Concern.

Today is a historic day as we begin serving clients as a top 10 professional services firm. Learn more from @FORVIS CEO Tom Watson and Chair Matt Snow: https://t.co/t5IW0BU97b pic.twitter.com/JcFMcz5xLD

— FORVIS (@FORVIS) June 1, 2022

We hope everyone at Forvis has a great day being their whole, true forward vision selves. And RIP BKD and DHG.

Related articles:

Rumor: BKD Is Going to Merge With Either DHG, Moss Adams, or Plante Moran Today (CONFIRMED: BKD and DHG)
Let’s Mesh Other Business Buzzwords to Form the Next Big Accounting Firm Name

The post Happy Forvis Day! appeared first on Going Concern.

Martin Shkreli, the so-called “pharma bro” who was widely criticized for raising the price of a lifesaving AIDS drug, has been released from federal prison.

Mr. Shkreli departed the Federal Correctional Institution Allenwood Low on Wednesday, according to the Federal Bureau of Prisons. Benjamin Brafman, a lawyer for Mr. Shkreli, said he has been transferred to a halfway house after completing programs that allowed for his prison sentence to be shortened.

A jury convicted Mr. Shkreli in 2017 on federal securities-fraud charges involving two hedge funds he managed and a company he founded. He was originally sentenced to serve seven years in prison.

[…]

Vyera Pharmaceuticals LLC, which Mr. Shkreli ran as chief executive when it was called Turing Pharmaceuticals AG, purchased exclusive rights to antiparasitic drug Daraprim for $55 million in 2015 and raised its price to $750 a tablet from $17.50 a tablet, according to court documents. The company also blocked competitors from making generic versions. The price hike was widely condemned at the time.

According to the Federal Bureau of Prisons, Shkreli is scheduled to be released from federal custody on Sept. 14.

‘Pharma Bro’ Martin Shkreli Released From Prison Early [Wall Street Journal]

Related article:

Egad, Pharma Bro Martin Shkreli Was an Insufferable Client

Photo credit: Dennis Van Tine/Alamy Stock Photo

The post Smug Smirking Douchebag Leaves Federal Prison Early appeared first on Going Concern.

The PCAOB has created new ways of disciplining audit firms and auditors who bend the rules, as the new chair and board members put more of a focus on enforcement and increasing their scrutiny of the guardians of the capital markets.

We saw the first such instance early last month when the PCAOB fined former KPMG vice chair of audit Scott Marcello $100,000 for “failure to reasonably supervise” other KPMG audit executives who engaged in a scheme from 2015 until 2017 to illegally obtain and use confidential PCAOB information in an attempt to improve KPMG’s PCAOB inspection results. It was the first time the PCAOB handed down that particular punishment to an individual. Williams said:

“This ‘first of its kind’ disciplinary action demonstrates that the PCAOB is committed to sanctioning top-level personnel at the largest firms when they fail to take sufficient supervisory steps aimed at preventing violations by their subordinates. Following the Department of Justice’s and the Securities and Exchange Commission’s actions against the perpetrators of the scheme, the Board believes it is important to hold Mr. Marcello accountable as their supervisor for contributing to a culture that led to this serious misconduct.”

Marcello was not one of the five KPMG executives who were indicted for their roles in the scandal, but he was fired by the firm in April 2017.

Then in late April, the US audit cops handed out two other first-time punishments to audit firms for improperly using non-US firms that aren’t registered with the PCAOB. In the first case, San Mateo, CA-based CPA firm WWC, which has offices in Hong Kong and Guangzhou in China, was taken to the PCAOB’s woodshed for “failure reasonably to supervise an unregistered firm.” The PCAOB said:

WWC used audit work performed by its unregistered Hong Kong affiliate in ten issuer audits. During these audits, WWC allowed the unregistered affiliate to exceed the level of participation requiring registration with the Board and thereby failed reasonably to supervise the Hong Kong firm in a manner designed to prevent violations of the Sarbanes-Oxley Act and PCAOB rules. Specifically, WWC took no steps to ensure that the unregistered affiliate’s participation would be consistent with PCAOB registration requirements. Accordingly, the Board found, among other violations, that WWC failed reasonably to supervise its unregistered affiliate.

WWC also failed to make timely and accurate Form AP and annual report filings, according to the PCAOB disciplinary order. WWC got censured, fined $50,000, and was ordered to take steps to improve its quality control policies and procedures.

In the second instance, Flushing, NY-based CPA firm JLKZ, which has locations in China and Malaysia, and its Managing Partner Jimmy Lee were given a joint fine of $50,000 for issuing an audit report where a separate, unregistered firm had conducted the underlying audit. This is the first time the PCAOB imposed this type of punishment to an audit firm. The audit regulator said:

Under an arrangement with an unregistered Chinese firm [SBA Stone Forest CPA Co.], JLKZ issued [2019] audit reports for two issuers after personnel of the unregistered firm acted as the engagement partner, audit staff, and engagement quality reviewer for the audits. The unregistered firm received most of the audit fees. The Board found that JLKZ violated PCAOB standards (AS 3101) by issuing audit reports where it had not conducted the underlying audits. The Board also found that JLKZ managing partner Jimmy P. Lee, CPA, directly and substantially contributed to the firm’s violations.

In its disciplinary order for JLKZ, the PCAOB said Stone Forest submitted a registration application to the PCAOB on or around Feb. 1, 2019. On Feb. 26, 2019, the PCAOB requested that Stone Forest provide certain additional information, but Stone Forest still hasn’t responded to the board’s information
request and isn’t registered with the PCAOB.

In addition to the fine, JLKZ and Lee were censured and JLKZ’s ability to accept new issuer or broker-dealer audit engagements was restricted for two years.

According to a recently released report from Cornerstone Research, the PCAOB disclosed 18 accounting and auditing enforcement actions in 2021, up from 13 in 2020 but down from 24 in 2019. Last year’s total is also lower than the five-year average of 29 enforcement actions from 2016 and 2020.

Related articles:

Better Late Than Never: PCAOB Fines Ex-KPMG Vice Chair of Audit Scott Marcello $100,000 In Connection With Inspection Scandal
SEC and PCAOB Enforcers Took An Extended Smoke Break In 2021

The post The PCAOB Ain’t Messing Around No More appeared first on Going Concern.

Another firm with a big pile of embarrassing PCAOB inspection reports is BDO USA. From 2012’s inspection report to 2016’s report, BDO had an awful average audit failure rate of nearly 63%. BDO followed that up with audit deficiency rates of 39% (2017), 48% (2018), 42% (2019), and a piss-poor 54.1% (2020).

So changes are afoot at Bravo Delta Oscar, according to a press release. First, BDO is reorganizing its assurance practice:

BDO’s Assurance practice is being reorganized into two distinct functional areas and reporting structures. The first functional area consolidates the operational, professional and client services aspects of the business under one umbrella. The second functional area covers quality management, inspections and independence, and will report to Lillian Ceynowa in her capacity as Audit Quality and Quality Management Leader. The purpose of this reorganization is to implement an objective governance structure focused on delivering high quality audits in order to protect investors and other stakeholders and further the public interest.

Another change is the addition of Ceynowa as the firm’s new audit quality and quality management leader. She most recently was an associate chief auditor at the PCAOB and was an audit manager at KPMG early in her career, according to her LinkedIn profile. She has also worked at the AICPA and the Center for Audit Quality. BDO said:

This role is a senior-level position intended to drive robust strategic actions to further strengthen audit quality.

Ceynowa brings more than 30 years of public company auditing experience. At the PCAOB, where she worked for over a decade, she was responsible for developing and advising on auditing and related professional practice standards, including auditor independence rules.

“I’m excited to join BDO, a firm which has already impressed me with the seriousness of its commitment to audit quality,” said Ceynowa. “I took this opportunity because I believe in the important role auditors play in effectively functioning capital markets. During my time at the PCAOB, I focused on protecting investors through policy initiatives that strengthened audit quality for the profession as a whole. Now, I can directly impact audit quality on BDO’s audit engagements by identifying opportunities to strengthen their system of quality management. I am excited about the prospects that lie ahead and very much look forward to helping take the firm’s commitment to audit quality to the next level.”

Finally, BDO has formed an Audit Quality Advisory Council:

The newly formed Audit Quality Advisory Council is designed to provide input regarding BDO’s system of quality management. The council includes an independent member who will provide objective input and perspectives to BDO based on his vast experience and background.

AQAC members include:

• Maria Karalis, Chair and BDO Board Member (Assurance)
• William Eisig, National Managing Partner and Practice Leader (Assurance)
• Phillip Austin, National Managing Partner – Professional Practice Leader & Audit
• Steven Shill, BDO Board Member (Assurance)
• Jim Brady, Independent Member, Vice Chairman of Advisory Services at alliantgroup and former Vice Chair at Grant Thornton LLP

“At BDO, one of our core values is to embrace change,” said William Eisig, CPA, National Managing Partner and Practice Leader, BDO Assurance. “As our firm has grown and evolved, so must our system of quality management. We are very focused on strengthening our approach to monitoring so that we can continuously enhance the quality of our audits. The initiatives we are reporting today will go a long way in reinforcing our vital role as auditors in sustaining strong capital markets.”

Let’s take a look at PCAOB inspection report results for two other firms that launched audit quality improvement committees in the last few years. EY formed an Independent Audit Quality Committee in early 2019 (former PCAOB member Jeanette Franzel serves on the panel), and since then, the firm’s auditing failure rates have improved from 26% in 2018 to 18% in 2019 to 15% in 2020. Grant Thornton also formed an Audit Quality Advisory Council in late January 2019, and its auditing report cards have gotten a lot better. Failure rates have dropped from 25% in 2018 to 22% in 2019 to 17.2% in 2020.

It’s anyone’s guess as to whether BDO will achieve similar improvements to its audit quality in the coming years, but having this new audit quality panel, as well as the other changes the firm made to its assurance practice, is at least a step in the right direction.

The post BDO USA Is Finally Trying to Do Something to Improve Its Horrible Audit Quality appeared first on Going Concern.

“The IRS destroying data for an estimated 30 million filers in March 2021 is appalling. This will create massive chaos for taxpayers in terms of filing time and refunds. The fact that the IRS is a business that operates in the dark ages in terms of technology further compounds the taxpayer’s burden. They act like they are Barnes & Noble when Amazon would be the benchmark.”

— Julio Gonzalez, CEO and founder of Engineered Tax Services, said in a press release emailed to Going Concern regarding the recent Treasury Inspector General for Tax Administration report that revealed the IRS destroyed approximately 30 million unprocessed paper information returns due to a backlog of paper returns.

The post Guy Compares the IRS to Barnes & Noble appeared first on Going Concern.

NJ.com reported:

Norah Bruther was hit by a car around 1:30 a.m. Saturday while trying to cross Camelback Road near Minnezona Avenue in Scottsdale, according to local police.

Scottsdale police arrested the driver Stanley Lambert, a senior football player at nearby Arizona State University.

Lambert was charged with two counts of driving under the influence — one for impaired to the slightest degree and one for having a blood alcohol content of .08% or more, officer Aaron Bolin wrote in an email to NJ Advance Media. Lambert, of San Antonio, Texas, faces additional charges after a prosecutor reviews the case.

According to authorities, Bruther was pronounced dead at the scene. She was staying near the area where the incident took place.

Bruther, who was raised in Wall, NJ, but was living in Manhattan, joined EY’s office in New York City as a Financial Services Office assurance associate in October 2020 after graduating from Moravian University with a bachelor’s degree in accounting, according to her obituary and profile on LinkedIn. She was recently promoted to senior associate. Her LinkedIn profile says she was working toward obtaining her CPA license.

Her family said she loved soccer and started playing at the age of 4. Bruther played soccer at Red Bank Catholic High School and was a co-captain her senior year. She also played defense for the Moravian women’s team. At Moravian, her family said she also earned Dean’s List honors; was a member of the Sigma Sigma Sigma sorority where she served on leadership council as risk manager and was a big sister; member of the Amrhein Investment Club; secretary of the university’s Accounting Club; member of the Accounting Honor Society; and the treasurer of the Operations Smile Club.

Her obituary says:

Although Norah was an accomplished student and professional, she will be best remembered as a Jersey Shore girl, who loved spending time with family and friends at the beach. Among Norah’s many hobbies were shopping and a newfound passion for cooking. Norah loved experimenting with new recipes with her sous chef, [boyfriend] Brandon [Sisk]. She was our fashion guru who lit up any room she walked into with an infectious smile and larger than life personality. When it came to her family and friends, no problem was too big or too small for Norah to lend a hand. Norah was generous with her time and loved planning parties for her family and friends. She lived life as a celebration and enjoyed new experiences and traveling.

Bruther is survived by her parents, John F. Bruther III and Piper Reid Bruther; sisters, Grace C. Bruther and Emma C. Bruther; maternal grandparents, Concetta S. Cannon and Thomas H. Reid; 18 aunts, 16 uncles, and 31 cousins, as well as countless friends and her boyfriend, Brandon Sisk.

Rest in peace, Norah.

N.J. woman, 23, killed by drunken driver while visiting Arizona, cops say [NJ.com]

The post RIP Norah Bruther, EY Senior Associate Who Was Killed By Alleged Drunk Driver appeared first on Going Concern.

No, Cathy Engelbert isn’t talking about the delicious summertime treat. She’s talking about “small moments of recovery.”

“I learned this at Deloitte because when you’re running a firm of that size, you have to find time. We dubbed them smors. My EA used to put them on my calendar: Small moments of recovery. You need moments during the day. One thing as an executive, you can’t wait for the weekend. You’ve got to put the smors on your calendar during the day or you’ll go crazy. I didn’t know this when I took the job, but once our games start, this calmness comes over me. It’s kind of neat.”

— Engelbert, former CEO of Deloitte US and current commissioner of the WNBA, said when asked by Time magazine what techniques she uses to de-stress.

Current and ex-Deloitters who worked at the firm during the Engelbert administration: Is this something she preached for employees to do as well? Or were your smors the 10 minutes you spent sobbing in the bathroom every day during busy season?

‘An Absolutely Unimaginable Situation.’ WNBA Commissioner Cathy Engelbert Addresses Brittney Griner Arrest [Time]

The post Former Deloitte CEO Is a Big Fan of ‘Smors’ appeared first on Going Concern.

Here’s what the PCAOB had to say on Wednesday:

The Public Company Accounting Oversight Board (PCAOB) today announced that it has sanctioned Citrin Cooperman & Company, LLP (“Citrin Cooperman”) and three of its partners (Joseph Puglisi, Mark Schniebolk, and John Cavallone) for violations of PCAOB rules and standards in connection with the December 31, 2016 and December 31, 2017 audits and examinations of a broker-dealer that holds customer assets.

The PCAOB found that Citrin’s engagement and quality review partners failed to adhere to PCAOB standards over multiple years. The PCAOB found that Puglisi, as engagement partner on both the 2016 and 2017 engagements, failed to sufficiently evaluate whether the broker-dealer (1) maintained effective internal controls over compliance with the Securities and Exchange Commission’s Customer Protection Rule and (2) complied with the reserve requirements of the Customer Protection Rule.

The Board also found that Puglisi failed to perform sufficient audit procedures to test the related supplemental information accompanying the broker-dealer’s financial statements. The Board determined that Schniebolk and Cavallone, as the 2016 and 2017 engagement quality reviewers, respectively, failed to appropriately evaluate the conclusions reached by Puglisi and the engagement team and to perform their reviews with due professional care.

The PCAOB also sanctioned Citrin Cooperman for failing to establish and implement appropriate quality control policies and procedures to provide it with reasonable assurance that work performed by its engagement personnel would comply with PCAOB standards and regulatory requirements. The Board further found that Citrin Cooperman did not take the necessary steps, after learning of deficiencies identified through the Board’s inspection of the firm’s 2016 audit and examination of the broker-dealer, to ensure that work was assigned to personnel having the degree of technical training and proficiency required in the circumstances.

“Firms must take into consideration the results of the Board’s inspection process and ensure that their systems of quality control prevent deficiencies from reoccurring,” said PCAOB Chair Erica Y. Williams.

As a result, Citrin Cooperman was censured, fined $200,000, and was ordered to undertake and certify improvements to its system of quality control. Puglisi was fined $25,000, suspended for one year from being an associated person of a registered public accounting firm, followed by a  one-year limitation from serving as an engagement partner or engagement quality reviewer on a similar engagement. Schniebolk and Cavallone each received a censure, a one-year limitation from serving as an engagement quality reviewer, and a $15,000 fine. The PCAOB also ordered Puglisi, Schniebolk, and Cavallone to complete an additional 20 hours of continuing professional education related to the audits and examinations of broker-dealers under PCAOB standards.

The post Citrin Cooperman Got Sent to Their Room By the PCAOB For Broker-Dealer Audit Screw-Ups appeared first on Going Concern.

I hated my job, I hated my boss (I was her only employee and she didn’t like me either), and my employer wasn’t that great. So my boss told me exactly which day I would be losing my job. I spent the entire workweek leading up to that Friday afternoon conference with my boss and HR bringing stuff home from my cubicle each day so I wouldn’t have to carry a box full of my personal belongings while being escorted out the door. When I walked out that door for the final time, I felt this overwhelming sense of relief, unlike the two times I was laid off, which left me scared shitless and wondering what the hell I would be doing the rest of my life.

I’d bet that many of the 2,500 people laid off from their jobs at online used car retailer Carvana yesterday also had that feeling of dread when they were told (some said by a pre-recorded video) on Zoom or in-person that they were being shown the door. Of those 2,500 people, many were in “operational positions” within the company, according to published reports. We’re not sure if any Carvana accountants were included in yesterday’s bloodshed, but at least one person on LinkedIn wrote “Carvana accounting and finance people, please reach out to me.” If anyone can confirm whether there were accountants at Carvana who were laid off yesterday, please get in touch with us using the contact info below.

Getting fired by a pre-recorded message via Zoom is bad enough, but one now ex-Carvana employee found out in the most shitty way possible that she no longer was employed.

Hopefully OP and the other 2,500-some people who lost their jobs yesterday land on their feet soon.

The post What a Sh*tty Way to Find Out You’ve Been Laid Off appeared first on Going Concern.

From the report, Accounting Class Action Filings and Settlements – 2021 Review and Analysis:

Reversing a three year trend, the number of securities class action filings involving accounting allegations dropped in 2021. Filings referencing financial  statement restatements and/or allegations of internal control weaknesses declined to the lowest level in 10 years.

In addition, the total value of all accounting case settlements fell to the lowest level over the last decade, reflecting both a drop in the number of settlements as well as a decline in settlement size.

Last year there were 46 securities class-action filings involving accounting cases, well-below the historical average of 61 and the second-lowest level in the past 10 years, the report states. In 2020 there were 70 accounting-related securities class actions filed by plaintiffs. That 34% year-to-year decrease is the largest in the past 10 years.

“Accounting cases” is defined by Cornerstone Research as cases “involving allegations related to Generally Accepted Accounting Principles (GAAP) violations, violations of other reporting standards, auditing violations, or weaknesses in internal controls over financial reporting.” Like last year’s report, this year’s focuses on class-action filings containing Securities Exchange Act Rule 10b-5, Section 11, or Section 12(a) claims.

Filings referencing financial statement restatements and/or allegations of internal control weaknesses declined to the lowest level in more than 10 years, according to Cornerstone Research. However, accounting case filings involving allegations of improper revenue recognition continue to surge: 41% of all accounting-related class-action filings in 2021, up from 37% in 2020 and 19% in 2019.

Guess what also surged among accounting case filings last year? Accounting allegations involving those pesky special-purpose acquisition companies (SPACs). Approximately 20% of accounting case filings in 2021 involved a SPAC, and in the second half of the year, that figure was nearly one in three. The report states:

During 2019 and 2020, only a handful of federal securities class actions involving SPACs were filed, but in 2021, federal filings involving SPACs became the dominant filing trend. Consistent with that overall trend, SPAC filings that include accounting allegations tripled in 2021 as compared to the prior year.

There are several trends in SPAC cases involving accounting issues that we have observed over the past three years:

• Approximately one in three initial complaints involving SPACs from 2019 through 2021 included accounting issues.
• Three law firms—The Rosen Law Firm, Glancy Prongay & Murray LLP, and Pomerantz LLP—were associated with almost 80% of accounting case filings involving SPACs from 2019 through 2021.
• Short-seller reports were commonly cited in cases involving SPACs. However, those reports were cited over one and a half times more often in accounting cases as compared with non-accounting cases filed during 2019 through 2021.
• The median filing lag after a De-SPAC transaction [the period when the equity of the combined company becomes publicly traded, often referred to as the “De-SPAC” period] was much greater in 2019-2020 (450 days) than it was in 2021 (106 days) for accounting case filings from 2019 through 2021 involving SPACs.
• Inappropriate revenue recognition and weaknesses in internal controls were the most common allegations in SPAC accounting cases, followed by allegedly omitted disclosures of related-party transactions.

Because filings of SPAC cases have largely occurred very recently, based on our research only one of these cases had reached settlement as of the end of 2021, and this case included accounting allegations. As more of these cases progress, we expect that SPAC cases may play a role in future accounting case settlement trends.

Speaking of settlements, there were 33 that involved accounting allegations in 2021, down from 38 settlements in the previous year, according to the report. The percentage of accounting case settlements fell to 38% of all securities class actions settled in 2021, compared to 49% in 2020.

The total value of securities class-action settlements with accounting allegations dropped sharply from $3.7 billion in 2020 to $755 million in 2021. The median settlement value for accounting cases was $7.5 million, down from a median settlement value of $11.3 million in 2020 (adjusted for inflation), despite an increase in the size of issuer firm defendants. According to the report, the average market capitalization of issuer defendants in accounting case settlements in 2021 was $7.3 billion, which is considerably higher than the median market capitalization and an increase of 48% over the average for 2020. As measured by total assets, issuer defendant size for 2021 settlements also grew, the report states. Median total assets of issuer defendants in accounting case settlements in 2021 increased by 14% over 2020.

For defendant companies named in accounting case filings, the Disclosure Dollar Loss Index, a measure of market capitalization losses, fell from $70.9 million to $29.4 million, its lowest level since 2017, according to Cornerstone Research.

The post Accountants Didn’t Wind Up In Court As Often In 2021 appeared first on Going Concern.

ICYMI, here’s Lord Sugar’s tweet regarding PwC’s summer Fridays policy:

This is a bloody joke. The lazy gits make me sick. Call me old fashioned but all this work from home BS is a total joke. There is no way people work as hard or productive as when they had to turn up at a work location. The pandemic has had long lasting negative effect. pic.twitter.com/MvS2cX9K8C

— Lord Sugar (@Lord_Sugar) May 5, 2022

And he doubled-down on his hatred of the current work-from-home culture, and PwC’s summer Fridays policy, in a column he wrote for The Daily Mail yesterday:

Covid has had many devastating consequences but — as far as business goes — the most damaging, in my view, is the secondary plague it has unleashed: Working From Home.

Last week, accountancy firm PricewaterhouseCoopers offered their 22,000 UK staff Friday afternoons off during the summer months — assuming they have got their work done by lunchtime that day.

But what about their colleagues and clients around the world? Let’s hope they’re not trying to complete a project that involves PwC’s UK staff on Friday afternoons!

It smacks of an initiative dreamed up by some 30-something exec, who thinks they’re being modern and inclusive.

Well, it isn’t. It’s divisive. What about the security guards, post-room workers, canteen staff and others who have to come into work? They will lose their jobs if this carries on.

Yet an increasing number of large corporations are trying to ingratiate themselves with both their staff and new recruits by promising them ‘hybrid’ working’ — which allows them to work from home for part of the week — or full-on WFH.

It’s unfair towards small businesses who rely on people multi-tasking — filling in here and there — something that’s impossible to do from home. How can they compete?

A lot of old, white businessmen feel the same way about WFH as Lord Sugar. They just don’t rant about it on social media or in a well-known publication. There are old, white executives at my wife’s employer who hate WFH but have acquiesced through gritted teeth to a hybrid work policy because:

1. They want to retain as many of their employees as possible. People have already left the company when it didn’t adopt a hybrid work policy fast enough for competitors that did.
2. They know potential new hires are going to ask about it and want it.

Hell, even my dad who is a retired white guy in his 70s isn’t a fan of employees working from home. He spent most of his career at a company that makes specialty coatings, lubricants, and adhesives for the automobile, steel, and manufacturing industries. Just the other day he told me, “You can’t make adhesives and the other products we sell to customers at home; the employees have to come to work to do that. There’s no other way.” Well, obviously. There are exceptions, depending on the industry. But it has been proven since the start of the pandemic that accountants and other non-client-facing employees in other professions CAN do their jobs at home or remotely without having to go to an office. What Lord Sugar and my dad don’t get is that WFH and hybrid work policies are being done in the name of retention and recruiting. My dad had no idea what the Great Resignation was.

Anyhoo, back to the PwCers in the UK who fired back on LinkedIn this week at Lord Sugar calling them “lazy gits” and PwC’s summer Fridays policy “a bloody joke”:

We’ll update this post if PwC UK or Chairman Kevin Ellis throw shade at Lord Sugar too.

Related article:

QOTD: Back In My Day, Accountants Had to Walk Uphill Both Ways In the Hot Sun to Get to Work, Says Crotchety Old British Guy

The post Things Are Getting Spicy Between PwC UK Employees and Lord Sugar appeared first on Going Concern.

But the U.K.’s House of Klynveld did something good for a change: KPMG gave an immediate pay raise of between £2,000 and £4,000 to its 15,800 U.K. employees but not to partners and associate partners. KPMG partners are doing just fine without it. According to The Times, the new salaries will be backdated to April and are in addition to KPMG’s annual pay review in October.

CEO Jon Holt announced the raises in a post on LinkedIn on May 6:

Will giving employees an out-of-the-blue raise in the middle of its fiscal year be enough to keep them from looking elsewhere? Who knows! But it’s more than some firms have done for their employees.

The post Compensation Watch ’22: Big 4 Firm With the Most Negative Publicity In the U.K. Tries to Change All That By Giving Staff Raises of At Least £2,000 appeared first on Going Concern.

This is a bloody joke. The lazy gits make me sick. Call me old fashioned but all this work from home BS is a total joke. There is no way people work as hard or productive as when they had to turn up at a work location. The pandemic has had long lasting negative effect. pic.twitter.com/MvS2cX9K8C

— Lord Sugar (@Lord_Sugar) May 5, 2022

PwC cuts back staff summer hours to retain talent [The Telegraph]

The post Back In My Day, Accountants Had to Walk Uphill Both Ways In the Hot Sun to Get to Work, Says Crotchety Old British Guy appeared first on Going Concern.

Thanks to a tipster, here’s an excerpt to an email Marcumites received regarding Friday summer hours and time off:

Summer Fridays & Office Closings

As Marcum continues to embrace the new normal, which includes hybrid work schedules and a stronger desire for work/life balance, Marcum will be establishing summer hours as well as closing our offices between Christmas and New Year’s. This is Marcum’s way of acknowledging these shifts in our corporate culture, as well as our continued effort to help you achieve work/life balance — all while continuing to service our clients with the highest level of excellence and growing your career at Marcum.

That news elicited this reaction from our tipster:

Marcum introduced things that every other major firm has, and presents it like a gift, but again, Marcum being last and not first. Those being summer Fridays (required to answer emails during that Friday) and time off between Christmas and New Year’s (required to use PTO).

And remember, kids: Just because firms (mostly understaffed these days) offer shorter office hours on Fridays during the summer doesn’t mean your workload and deadlines also take a half-day on Fridays. You’ll just be pushing off that work until Saturday and/or Sunday. Yay! Work-life balance!

And speaking of the office, Weiner still is pining for people to get back to theirs instead of working from home. Our tipster told us:

Jeff asked again for people to come back to the office, but anyone with a brain knows not coming into the office will work against you during comp time.

Related articles:

Rumor Mill: Two Top 35 Accounting Firms (One In the Top 15) Are In Merger Talks (UPDATE: Friedman and Marcum Merger Official)
Marcum Leads Public Accounting In Posting Awkward Busy Season Pizza Party Photos on Social Media

The post Marcum Gives Employees the ‘Gift’ of Summer Hours on Fridays appeared first on Going Concern.

Leading national accounting and advisory firms Marcum LLP (“Marcum”) and Friedman LLP (“Friedman”) today announced that they are in advanced discussions related to a proposed transaction in which Friedman will merge into Marcum, resulting in a national top-12 firm with approximately $1 billion in annual revenue and more than 3,400 associates.

The merger of Marcum (ranked No. 15 by Accounting Today) and Friedman (ranked No. 33) is anticipated to close in the summer of 2022. The transaction will combine two well-regarded national firms with a shared emphasis on superior service, outstanding talent, industry specialization, and a focus on meeting clients’ needs in a rapidly evolving business landscape. The combination will:

• Deepen the firms’ capabilities in key service areas, including public company audit and assurance, digital assets, cybersecurity, real estate, construction, and other advisory services. It will be one of the largest firms serving Chinese companies listed on the U.S. stock markets.
• Give Friedman clients access to expanded services, including strategic information technology consulting and wealth management.
• Combine the best of two employee-centric cultures with a continued commitment to diversity, equity and inclusion; learning and development; and work/life balance.
• Enable the Firm to enhance and scale investment in technology, talent, and innovation.

The combined firm will operate under the Marcum brand and continue to be headquartered in New York City, with offices throughout the continental United States, China, Ireland, and Grand Cayman.

“Marcum and Friedman share common roots in the New York area, extensive histories of exceptional client service, similar employee-oriented cultures, and a commitment to leading in emerging growth areas in our profession. We view this transaction as a very natural fit and are excited about our shared future together,” said Jeffrey M. Weiner, chairman and chief executive officer of Marcum, who will maintain both leadership roles once the proposed transaction is completed.

“Friedman has experienced record growth, hiring, and revenues over the past two years, giving us a position of strength from which to consider our next strategic move. After extensive discussions, it became clear to us that combining our resources with Marcum would be in the best interests of our clients, partners, and employees,” added Frederick R. Berk, co-managing partner of Friedman.

“Friedman has been fortunate during its history to grow through selective mergers, the addition and retention of great clients, and the thoughtful contributions of employees at every level of our firm. Joining with Marcum is the next logical step in that evolution. Our complementary practices and entrepreneurial mindsets form a powerful foundation for long-term strategic growth,” said Harriet Greenberg, co-managing partner of Friedman.

[UPDATE on April 26] It sounds like the merger between Friedman and Marcum is a foregone conclusion. Our source who tipped us off Monday about the two firms being engaged in merger discussions told us this morning:

Yesterday Friedman employees were on a call with [Marcum Chairman and CEO] Jeff Weiner. It was discussed about a potential merger, but it appears it’s already done, just crossing off legal or admin items. Yesterday afternoon, the Marucm Partner group was notified of the merger.

Marcum will be acquiring Friedman. Friedman employees are not happy about it. Some of Friedman things such as Summer Fridays and expense reimbursement bonus will come to Marcum. Knowing Marcum … they will be removed after a year.

So what exactly were Friedman employees told yesterday? Fortunately someone from that firm got in touch with us this morning and told us this:

Can confirm that Friedman and Marcum expect to merge to be included under “Marcum LLP” — told during town hall yesterday — 95% chance expected to occur. Friedman currently in due diligence stage — expected to be completed during July or August 2022.

The Friedman employee told us that management “tried to frame [the merger] as it will be rosy, and depending on your office and group, that will dictate how much change there will be (New Jersey office expects less change than New York office).” Our Friedman source said he/she is ambivalent about the merger.

They are saying everything (title, salary, etc.) should carry over and probably in a year will be meshing based on the office location and size — most people don’t like change so I presume most employees are ambivalent. It’s probably better for partners vs. employees overall I guess.

Marcum and Friedman have yet to respond to a request for comment on the merger rumors. We’ll continue to update this article if we get any new information.

[Original article posted the evening of April 25.]

Coming on the heels of a mega-merger in mid-February when top 20 public accounting firms BKD and Dixon Hughes Goodman (DHG) announced their nuptials, which when finalized will create a new yet-to-be-named top 10 firm, we are hearing that one of the 15 largest firms in the U.S. is in the talking stage of their pre-merger relationship with a firm in the top 35.

We have not yet received a response to this rumor from the two firms allegedly involved in merger discussions, but here is the tip we got earlier today from a reliable source:

Rumor has it that Friedman is merging into Marcum. Friedman employees are having a meeting today and it will be discussed. I don’t know anything else.

According to the latest top 100 firms report from Accounting Today, Marcum is the 15th biggest in terms of revenue ($799 million as of December 2021), while Friedman sits at No. 33 ($178 million as of December 2021). So if what we were told is true about the two NYC-based firms, a Marcum/Friedman merger would put combined revenue at about $977 million. Assuming Friedman merges into Marcum, Marcum would slide between Crowe at No. 11 ($998.7 million) and Moss Adams at No. 12 ($954.5 million).

We’ll update this article if either of the two firms are willing to comment on the rumor, but if any of you at Marcum or Friedman have been told about a possible merger between the two firms, give us a shout using the contact information below. All tipsters will be kept anonymous.

Related article:

Rumor: BKD Is Going to Merge With Either DHG, Moss Adams, or Plante Moran Today (CONFIRMED: BKD and DHG)

The post Rumor Mill: Two Top 35 Accounting Firms (One In the Top 15) Are In Merger Talks (UPDATE: Friedman and Marcum Merger Official) appeared first on Going Concern.

Crowe also must be back in the good graces of its employees. According to the website Great Place to Work, which partners with Fortune every year for the BCTWF, 90% of Crowe employees consider the firm a great place to work. Crowe employees had other things to say about the firm’s culture:

• 95% say management is honest and ethical in its business practices.
• 95% say they felt welcomed when they first joined Crowe.
• 94% say Crowe employees care about one another.

In its first year making the BCTWF in 2018, Crowe was ranked No. 62, followed by No. 68 in 2019 and No. 81 in 2020.

Here’s why Crowe is back for 2022, according to Fortune:

Where other companies may offer flexible PTO policies, Crowe has successfully implemented a framework that makes it feasible for employees to take time off when they need it. All staffers at the privately owned accounting, consulting, and technology company are assigned a career coach who works with them and their manager to balance their personal needs with those of the firm and its clients, and ensures staffers take adequate time away throughout the year. Crowe also encourages its employees to give back to their local communities. Last year the firm provided each person with “Crowe Gives Back Bucks” to donate to a nonprofit of their choice. Crowe also provides eight hours of volunteer time per month—which adds up to nearly 100 hours of community service per employee on an annual basis. DEI initiatives are championed by the Inclusion Excellence Council (IEC), chaired by Crowe’s chief diversity officer. As one employee notes, “Crowe has actively integrated its inclusive and supportive culture into every aspect of its business.”

The firm also doled out mid-year comp adjustments and bonuses to employees last December. Here are some stats of note:

• Employees: 5,135
• Number of job openings: 548 (as of March 2022)
• Number of job applicants (last 12 months): 40,979
• Average number of applicants per opening: 41
• Number of new graduates hired: 497
• Percentage of women: 45.2%
• Percentage of minorities: 21.6%
• PTO limit (days): N/A
• Number of sick days: Unlimited

In case you missed any of our previous posts on the 2022 Fortune BCTWF, click on the links below:

The Fortune 100 Best Companies to Work For: Deloitte #24 (2022)
The Fortune 100 Best Companies to Work For: Plante Moran #30 (2022)
The Fortune 100 Best Companies to Work For: RSM US #40 (2022)
The Fortune 100 Best Companies to Work For: KPMG #41 (2022)
The Fortune 100 Best Companies to Work For: EY #52 (2022)
The Fortune 100 Best Companies to Work For: PwC #63 (2022)

The post The Fortune 100 Best Companies to Work For: Crowe #67 (2022) appeared first on Going Concern.

Chartered Accountants ANZ has belatedly ruled that only 12 of the 422 members from big four consulting firm KPMG who took part in systemic exam cheating will be put through the professional body’s individual disciplinary process.

The body’s disciplinary committee ruled that the “activities undertaken” by 410 KPMG CA ANZ members involved in the cheating “did not meet the threshold for further action under the Code of Ethics and CA ANZ by-laws”, and the sanctions and remedial actions already applied by KPMG Australia were “sufficient”.

The wrongdoing, which involved KPMG partners and staff cheating on courses that covered independence, audit and accounting rules, continued for at least five years until early 2020 and involved 18 partners and more than 1100 staff at the firm.

The US audit watchdog, the Public Company Accounting Oversight Board (PCAOB), issued a detailed report last September outlining the extent of the cheating, and fined the firm $US450,000 ($608,600) over the behaviour.

Chartered Accountants may only discipline 12 of 422 KPMG cheaters [Australian Financial Review]

Related article:

KPMG Australia Audit Partners and Staff Didn’t Get Away with Cheating on Internal Training Exams Either

The post In KPMG Australia Cheating Scandal, Apparently Cheaters *Do* Win appeared first on Going Concern.

So if you haven’t heard, the two firms decided to merge in February as equals; therefore, instead of one firm merging into the other, they would start from scratch as a brand-new firm with a brand-new name. Forvis is expected to be the eighth-largest public accounting firm in the U.S. when it officially launches on June 1. The Powers That Be at BKD and DHG decided on Forvis as the firm’s name by combining the words “forward” and “vision.” One BKD employee who reached out to us about the new firm name said, “Quite a bold move not going with initials. I admire the effort but the name just seems kind of awkward to say.”

It’s awkward to say the least. That’s what happen when you combine two buzzwords for your firm’s new name. So that gave me an idea: when the next big accounting firm merger of equals happens–say Moss Adams and Plante Moran or Crowe and CliftonLarsonAllen–let’s figure out what the new name will be by combining two business buzzwords. I’ll start:

• Synerage (synergy and leverage)
• Engagile (engage and agile)
• Innoruptor (innovative and disruptor)
• Pivoptimize (pivot and optimize)
• Scaladigm (scalable and paradigm)
• Holtuitive (holistic and intuitive)

HA! I kinda like Synerage!

Related article:

Rumor: BKD Is Going to Merge With Either DHG, Moss Adams, or Plante Moran Today (CONFIRMED: BKD and DHG)

The post Let’s Mesh Other Business Buzzwords to Form the Next Big Accounting Firm Name appeared first on Going Concern.

Fortune doesn’t reveal why a particular company fell so many spots in its ranking from one year to the next, so why the best public accounting firm to work at dropped 25 positions from 2021 to 2022 is anyone’s guess. Maybe not enough employee sundae bar toppings? (See photo above.) Desperate and occasionally suspect recruiting practices? New Equation fatigue? Too much Tim Ryan … everywhere? Who knows! But only 84% of PwC employees consider it a great place to work, according to the website Great Place to Work, which partners with Fortune every year for the BCTWF. That is the second-lowest percentage among the Big 4 firms (EY’s is the worst at 81%).

Here’s how PwCers rated the firm in other areas:

• 93% say management is honest and ethical in its business practices.
• 92% say PwC’s people are willing to give extra to get the job done.
• 91% say they are #PwCproud to tell people they work at PwC.

This is the 18th time PwC has made the Fortune BCTWF in the ranking’s 25-year history. In the last five years, PwC has been ranked:

• 2021: 38th
• 2020: 36th
• 2019: 44th
• 2018: 56th
• 2017: 23rd

Here’s a lengthy recap of why PwC made this year’s BCTWF, according to Fortune:

PricewaterhouseCoopers is making industry-leading strides in its commitment to diversity, equity, and inclusion at all levels. It’s serious about attracting new and diverse talent: In April 2021, building on its existing relationship with 35 HBCUs and 41 Hispanic-serving institutions, the firm made a new $125 million commitment to its Access Your Potential program, which fosters a equitable future for 25,000 Black and Latinx college students by providing digital mentorship and skills training to prepare them for the start of their careers. In addition to a goal of hiring 10,000 new graduates over the next five years, PwC also offers a Student Loan Paydown benefit in which the company pays up to $1,200 per employee each year. In July 2021 it took additional steps toward fostering a more equitable workplace through a robust expansion of its existing transgender-specific health benefits, as well as building on the Inclusion Networks to launch a new inter-belief group with subchapters for Christian, Jewish, Muslim, and Hindu professionals and their allies. As one employee says, “Our leadership’s prioritization of social justice and ESG initiatives this past year has demonstrated that it’s not just fluff, and we really are committed to this goal.”

It should also be noted that PwC is now giving employees a bonus to use their vacation time, doled out better-than-usual raises last year, and the firm also gave out mid-year “Timmy Stimmys” to most PwCers.

Stats of note:

• Employees: 55,000
• Number of job openings: 6,764 (as of March 2022)
• Number of job applicants (last 12 months): 561,111
• Average number of applicants per opening: 43
• Number of new graduates hired: 5,053
• Percentage of women: N/A
• Percentage of minorities: N/A
• PTO limit (days): 37
• Number of sick days: Unlimited

We’ll finish up our coverage of the 2022 Fortune BCTWF next week.

Related articles:

The Fortune 100 Best Companies to Work For: Deloitte #24 (2022)
The Fortune 100 Best Companies to Work For: Plante Moran #30 (2022)
The Fortune 100 Best Companies to Work For: RSM US #40 (2022)
The Fortune 100 Best Companies to Work For: KPMG #41 (2022)
The Fortune 100 Best Companies to Work For: EY #52 (2022)

The post The Fortune 100 Best Companies to Work For: PwC #63 (2022) appeared first on Going Concern.

While doors will open for someone with experience at EY on their resume, that doesn’t necessarily mean that person’s experience building a better working world was a good one. Of the Big 4 firms, EY has the lowest percentage of employees who say the firm is a great place to work, at 81%, according to the website Great Place to Work, which partners with Fortune every year for the BCTWF. And of the 100 companies on this year’s BCTWF, only six have either the same or a worse great place to work percentage than EY: No. 12 Target (70%), No. 82 OhioHealth (78%), No. 90 Wellstar Health System (81%), No. 96 T-Mobile (80%), No. 99 Dow (74%), and No. 100 FedEx (78%).

Other EY employee job satisfaction percentages of note include:

• 90% say they felt welcomed when they joined EY.
• 90% believe management is honest and ethical in its business practices.
• 9o% say they are proud to tell others that they work at EY.

In the previous five years, Fortune has ranked EY:

• 2021: 41st
• 2020: 25th
• 2019: 34th
• 2018: 52nd
• 2017: 29th

There must be something good that EY has done to warrant them being No. 52 this year. Here’s what Fortune said:

As the pandemic upended the way we work, the professional services firm quickly updated policies and ushered in new programs to support its workforce. That includes more freedom for EY’s employees to take vacation—days off are no longer accrued—in addition to 20 paid holidays and two weeklong, firm-wide breaks in the winter and summer. Other changes: EY doubled the backup-care benefit for caregivers (24 days, up from 12), and now offers its employees and their household family members up to 25 no-cost counseling and mental health coaching sessions per year. Those kinds of benefits, along with the firm’s robust career development opportunities, lead almost 90% of EY’s employees to say they feel supported at work, both in their well-being and professional advancement.

Even though there was a lot of outrage when EY announced it was switching to unlimited PTO in October 2020, it seems like many EYers now don’t mind having it—although some snarky EYers say  “but we have unlimited PTO!” when asked on the usual chatter sites why EY was the only one of the Big 4 that didn’t give its employees a mid-year raise in fiscal year 2022. Firm leadership told employees the reason why they didn’t give out mid-year salary increases is because the firm is already the market leader in salaries among the Big 4 and “our competitors are now making adjustments to catch up to us.” But now we know the real reason: EY says professionals don’t really want more money and promotions; what they really, really want is empathetic leadership.

This is just wild speculation on my part but EY is probably either first or second among the Big 4 firms in voluntary turnover since the start of the Great Resignation—and why only 81% of people consider it a great place to work—because leadership actually believes that type of crap. The good news for EYers is there will be someone new leading the firm starting July 1, as Julie Boland, current EY vice chair and managing partner of the firm’s Central Region, will take over as US chair and managing partner and EY Americas managing partner. Kelly Grier announced last October that she wouldn’t pursue a second four-year term.

Stats of note:

• Employees: 55,200
• Number of job openings: 11,400 (as of March 2022)
• Number of job applicants (last 12 months): 270,250
• Average number of applicants per opening: 32
• Number of new graduates hired: 5,200
• Percentage of women: N/A
• Percentage of minorities: N/A
• PTO limit (days): Unlimited
• Number of sick days: 10

With a new CEO starting, a new fiscal year a couple months away, and then compensation discussions right around the corner, maybe things will start looking up for employees of the Black and Yellow. Or not.

Related articles:

The Fortune 100 Best Companies to Work For: Deloitte #24 (2022)
The Fortune 100 Best Companies to Work For: Plante Moran #30 (2022)
The Fortune 100 Best Companies to Work For: RSM US #40 (2022)
The Fortune 100 Best Companies to Work For: KPMG #41 (2022)

The post The Fortune 100 Best Companies to Work For: EY #52 (2022) appeared first on Going Concern.

For the most part, people seem to enjoy working at KPMG. According to the website Great Place to Work, which partners with Fortune every year for the BCTWF, 86% of KPMGers say the firm is a great place to work, which is second highest among the Big 4 (Deloitte is at 88%). Other KPMG employee happiness findings from GPTW include:

• 93% say they felt welcomed when they joined KPMG.
• 92% believe management is honest and ethical in its business practices (that percentage was probably MUCH lower in 2017 and 2018).
• 92% say they are offered training or development to further their professional careers.

This is the 15th time KPMG has made Fortune’s BCTWF in the ranking’s 25-year history. In the previous five years, KPMG has been ranked:

• 2021: 39th
• 2020: 32nd
• 2019: 36th
• 2018: 29th
• 2017: 12th

Here’s why KPMG made this year’s BCTWF, according to Fortune:

KPMG doesn’t just acknowledge the pandemic’s toll on workers, it has deployed a host of tools to help them cope. To guard against burnout and overwork, the professional services firm introduced camera-free Fridays and two annual, firm-wide breaks that give employees at least nine consecutive days off in both the winter and summer. For mental health, employees or their family members can access up to 10 free counseling sessions. In order to cover the cost of a home office setup or other remote work expenses, everyone received an extra $1,000. For kids and parents struggling with remote learning, KPMG created a resource kit and facilitated the creation of learning pods. Those pandemic-era accommodations bolstered the firm’s longstanding commitment to career development, which is offered in the form of mentorships (some 13,000 of them) and numerous leadership training programs that in recent years have increased focus on women and other underrepresented groups.

In addition to all of that, KPMG’s employee retention maneuvers included changing its 401(k) contribution policy and lowering the vesting period from five years to three years, and giving all employees mid-year raises that went into effect on April 1 (in addition to the usual raises and bonuses employees received last fall), although many KPMGers started to panic on April 15 when their new inflated paychecks didn’t hit their bank accounts right away. And KPMG dumped Phil Mickelson in February.

Stats of note:

• Employees: 35,526
• Number of job openings: 4,225 (as of March 2022)
• Number of job applicants (last 12 months): 303,935
• Average number of applicants per opening: 23
• Number of new graduates hired: 4,600
• Percentage of women: N/A (46% according to KPMG’s 2021 DEI Transparency Report)
• Percentage of minorities: N/A (35% according to KPMG’s 2021 DEI Transparency Report)
• PTO limit (days): 37
• Number of sick days: Varies

We’ll continue our coverage of the Fortune 2022 BCTWF throughout this week.

Related articles:

The Fortune 100 Best Companies to Work For: Deloitte #24 (2022)
The Fortune 100 Best Companies to Work For: Plante Moran #30 (2022)
The Fortune 100 Best Companies to Work For: RSM US #40 (2022)

The post The Fortune 100 Best Companies to Work For: KPMG #41 (2022) appeared first on Going Concern.

With the release of Vault’s 2023 prestige ranking yesterday, PwC has now locked down first place for 14 straight years. Of the 17 times Vault has done a prestige ranking, only two other firms have held the top spot: EY in 2007 and Deloitte in 2009. PwC also held the title of most prestigious firm in 2008.

PwC’s prestige score of 8.914 out of 10 in 2023 is the highest ever in the history of Vault’s prestige ranking, beating its own record of 8.880 in 2022’s ranking.

To figure out which accounting firm is the most prestigious, Vault gave 9,700 accounting professionals a survey to complete between December 2021 and February 2022. The survey consisted of questions about life at the accountant’s firm (or former firm) and a prestige rating. As for the prestige rating, survey participants were asked to rate firms other than their own on a scale of 1 to 10, with 10 being the most prestigious. Participants were asked only to rate firms with which they were familiar, and were not permitted to rate their own (or former) firm. Vault then averaged the prestige scores for each firm and ranked them in order.

Unlike its ranking of the best accounting firms to work for, which featured only 25 firms for 2023 instead of the usual 50, Vault kept its 2023 prestige ranking at 50 firms. There are no changes among the top 13 firms from the previous year’s ranking: you have the Big 4 (PwC, Deloitte, EY, and KPMG), then the top rung of the mid-tiers (Grant Thornton, BDO USA, and RSM US), and then the second level of mid-tier firms (Baker Tilly, Crowe, Moss Adams, CohnReznick, CliftonLarsonAllen, and BKD). The first firm to change positions is Marcum, which moved up one spot to 14th in 2023. Here are the 50 firms in the US dripping in prestige:

1. PwC (1)
2. Deloitte (2)
3. EY (3)
4. KPMG (4)
5. Grant Thornton (5)
6. BDO USA (6)
7. RSM US (7)
8. Baker Tilly (8)
9. Crowe (9)
10. Moss Adams (10)
11. CohnReznick (11)
12. CliftonLarsonAllen (12)
13. BKD (13)
14. Marcum (15)
15. EisnerAmper (14)
16. Plante Moran (16)
17. CBIZ MHM (18)
18. Dixon Hughes Goodman (17)
19. Mazars USA (20)
20. Cherry Bekaert (19)
21. Eide Bailly (22)
22. Armanino (25)
23. Withum (24)
24. Wipfli (26)
25. Citrin Cooperman (21)
26. UHY Advisors (28)
27. Friedman (23)
28. RubinBrown (27)
29. Cohen & Co. (30)
30. PKF O’Connor Davies (31)
31. The Siegfried Group (30)
32. Novogradac & Co. (41)
33. Elliott Davis (34)
34. Carr, Riggs & Ingram (40)
35. Frank Rimerman + Co. (48)
36. Bennett Thrasher (39)
37. Sikich (42)
38. BPM (43)
39. (tie) Anchin (37)
39. (tie) Berdon (36)
41. Grassi & Co. (38)
42. Whitley Penn (45)
43. HCVT (NR)
44. Wolf & Co. (NR)
45. Doeren Mayhew (49)
46. Frazier & Deeter (47)
47. HBK (NR)
48. Warren Averett (NR)
49. Kaufman, Rossin & Co. (NR)
50. Aronson (46)

Congrats to these firms for racking up the most prestige points. Commence bragging.

Related article:

PwC Does Not Relinquish Top Spot In Vault Accounting 25 (2023)

The post PwC Finishes First In Vault’s Accounting Firm Prestige Ranking For the Gazillionth Time (2023) appeared first on Going Concern.

This is the 10th straight year PwC has held the top spot in the 13-year history of Vault’s ranking, and the House of Ryan’s total score of 8.807 out of 10 beat 2022’s score of 8.742, which at the time was the highest score ever earned by any firm. Unfortunately now that Vault’s rankings are housed on the website Firsthand.com, the fun bad reviews (one- or two-star) for each firm are no longer published. So we’ll have to settle for things like “great culture,” “amazing, friendly people,” the “flexibility and ability to work remotely,” and “endless growth and learning opportunities” as why PwC is the best public accounting firm to work for.

The Vault Accounting 25 is based on the results of a survey of more than 9,700 accounting professionals, who were asked to rate their firms in several workplace categories, including benefits, compensation, culture, diversity, hours, satisfaction, training, wellness offerings, and work/life balance. They were also asked to rate firms other than their own in terms of prestige. The Accounting 25 is then compiled using a weighted formula based on these internal and external rankings.

According to Vault, non-PwCers called the firm “the gold standard,” “elite,” “the best and most prestigious firm in the world by far,” and “built to continue leading into the future.” PwCers say the firm is a “good place to start a career,” has “strong technical and training programs,” and their “compensation is great.”

The top five firms in the 2023 Vault Accounting 25 are the same as in 2022 and 2021. Deloitte, which held the top spot in Vault’s inaugural ranking in 2011, is again No. 2 in 2023. According to Vault, accountants at peer firms say Deloitte is “the best of the Big 4,” “aggressive,” “high quality,” “the leader in the industry,” and “the top global firm.” Deloitters told Vault that the firm has “great leadership, culture, and people,” as well as “limitless growth, development, and learning opportunities.” Deloitte employees also appreciate the “flexible work options” and “ability to work remotely,” Vault said.

In third place is KPMG, which according to what Klynveldians told Vault, has the “best and brightest colleagues,” “world-class clients,” “flexibility of hours,” and “endless development opportunities.” Non-KPMG employees said the firm is “very prestigious” and a “great firm” with a “friendly culture,” according to Vault.

In fourth once again is BDO USA, followed by Plante Moran in fifth. Wondering where EY is? That would be No. 23, up from No. 29 in 2022. The biggest mover within the Accounting 25 is Rehmann, which jumped seven spots from 26th in 2022 to 19th in 2023. Firms other than EY that gained six spots include Marcum, BPM, Grant Thornton, and Crowe. The biggest losers this year are RSM US and Grassi—both dropped two spots in 2023’s ranking.

New to the top 25 for 2023: Rehmann, BPM, Grant Thornton, and Crowe.

Firms that fell out of the top 25 in 2023: Withum, Brown Smith Wallace, Marks Paneth, Mazars USA, and Sikich.

Here’s the full 2023 Vault Accounting 25 ranking (previous year’s ranking in parenthesis):

1. PwC (1)
2. Deloitte (2)
3. KPMG (3)
4. BDO USA (4)
5. Plante Moran (5)
6. Moss Adams (8)
7. Baker Tilly (7)
8. RSM US (6)
9. CohnReznick (9)
10. CBIZ MHM (10)
11. Friedman (11)
12 Schellman & Co. (12)
13. Marcum (19)
14. PKF O’Connor Davies (15)
15. Eide Bailly (17)
16. Frank, Rimerman + Co. (18)
17. Armanino (16)
18. Aprio (21)
19. Rehmann (26)
20. Frazier & Deeter (24)
21. BPM (27)
22. Grassi (20)
23. EY (29)
24. Grant Thornton (30)
25. Crowe (31)

Tomorrow we’ll get to Vault’s prestige ranking, which is once again dominated by PwC.

Related articles:

Vault Accounting 50: PwC Remains No. 1; Top 5 SALY (2022)
PwC Continues to Dominate Vault Accounting 50 (2021)

The post PwC Does Not Relinquish Top Spot In Vault Accounting 25 (2023) appeared first on Going Concern.

Which firm has led the most through the years? Obviously the most prestigiousiest one:

• PwC: 10
• Deloitte: 1
• EY: 1
• Grant Thornton: 1

Here’s a handy-dandy list of which firms have topped the Vault Accounting 50/25 each year dating back to 2011:

• 2011: Deloitte
• 2012: Grant Thornton
• 2013: EY
• 2014: PwC
• 2015: PwC
• 2016: PwC
• 2017: PwC
• 2018: PwC
• 2019: PwC
• 2020: PwC
• 2021: PwC
• 2022: PwC
• 2023: PwC

One of these days it’ll happen for you, KPMG. One of these days.

Related article:

PwC Does Not Relinquish Top Spot In Vault Accounting 25 (2023)

The post Listicle of the Day: Firms That Have Topped the Vault Accounting 50/25 Through the Years appeared first on Going Concern.

And EY responded to his post!

Now that EY deleted its stupid social media post, was Hall done making fun of them? Nope! He posted this on LinkedIn yesterday:

But today’s LinkedIn post from Hall was the coup de grâce:

He’s a snarky jerk after our own heart.

Related article:

The Thing Workers Want Most Is Not Better Pay But Empathetic Employers Says Employer Unwilling to Pay You More

The post Former EY Consultant Won LinkedIn Today appeared first on Going Concern.

Compared to the usual suspects from public accounting that make the BCTWF nearly every year, RSM US is a newbie. Last year was the first time in the ranking’s 25-year history that RSM made it, coming in at No. 62. Here’s why RSM made the BCTWF for the second straight year, according to Fortune:

When the coronavirus pandemic hit, RSM responded with increased childcare support, extra PTO, and new mental health services. This year, it’s on the list for the second time—and 22 spots higher. Not only did RSM continue to pay out bonuses and raises throughout the pandemic, but in May 2021 it delivered a Gratitude Award or $1,000 bonus to all employees who had been with the accounting firm for the entire fiscal year (those with shorter tenures received $500). In December 2021, employees benefited from an extra cycle of raises. RSM staff also feel as if they can bring their whole self to work: “I am extremely proud of RSM’s care for their associates,” one worker notes. “I truly believe that employees are not just comfortable but encouraged to be themselves.”

ICYMI, here’s what we wrote about the raises RSM employees got last year, as well as the mid-year raises that the firm handed out last December.

Stats of note:

• Employees: 12,2417
• Number of job openings: 5,760 (as of March 2022)
• Number of job applicants (last 12 months): 102,300
• Average number of applicants per opening: 25
• Number of new graduates hired: 2,100
• Percentage of women: 46%
• Percentage of minorities: 23.4%
• PTO limit (days): N/A
• Number of sick days: Unlimited

RSM will have a new leader on Aug. 31, as Brian Becker, the firm’s national consulting leader, will succeed Joe Adams as RSM managing partner and CEO. We’ll see if RSM can keep that positive mojo rolling when Becker takes the helm later this summer.

Related articles:

The Fortune 100 Best Companies to Work For: Deloitte #24 (2022)
The Fortune 100 Best Companies to Work For: Plante Moran #30 (2022)

The post The Fortune 100 Best Companies to Work For: RSM US #40 (2022) appeared first on Going Concern.

I had no idea this was a thing. Someone in the comment section said the commercial was on KPMG US’s YouTube channel, so I went there, and sure enough, there are a series of three “Reconnect with KPMG” ads. And I watched them.

They are sorta fashioned after the “This is Sportscenter” commercials on ESPN, with the location, date, and time shown of when the scene was supposedly happening in KPMG’s offices. Are they cringey? Yes, very! Are they “return to office propaganda?” Absolutely! That’s the whole point of each of the three commercials. They want you to talk to your co-workers around the watercooler again. They want you to believe that once you walk through those KPMG doors for the first time in two years or however long it’s been since the Rona sent you home to work, there will be a celebration with streamers and balloons and your colleagues hootin’ and hollerin’. They want to entice you with a variety of nearby restaurant menus so you can go out to lunch with your co-workers again. All three are full of kumbaya cheesiness.

Are they the worst public accounting firm ads I’ve ever seen? No. At least KPMG tried to make them slightly entertaining. Have you seen a BDO USA TV commercial? Yeesh, they are horrible. I have to watch one nearly every day during the WGN Morning News. And nothing can be worse than that EY Super Bowl ad from a couple of years ago.

KPMG Norway did the same thing as KPMG US late last year, but their return-to-the-office ads are actually amusing for a stuffy Big 4 firm.

Anyway, the three “Reconnect with KPMG” ads are below. You can judge for yourself whether they are cringey, return-to-the-office propaganda or just another thing they can show potential recruits about how fun it can be to work at KPMG. Or both.

Related article:

KPMG Norway Has Achieved the Impossible And Created a Mildly Amusing Video (For an Accounting Firm)

The post Someone Is Not a Fan of KPMG’s New ‘Reconnect with KPMG’ Ad Campaign appeared first on Going Concern.

We're in the final stretch of the #taxseason. Our Fort Lauderdale office took a much needed break and gathered for happy hour while enjoying pizza and beer. #marcumeverywhere #funatwork pic.twitter.com/QJx0VBxD2R

— Marcum LLP (@MarcumLLP) April 5, 2022

It looks like everyone is having the time of their lives.

The post Marcum Leads Public Accounting In Posting Awkward Busy Season Pizza Party Photos on Social Media appeared first on Going Concern.

So is now-retired Deloitte partner Paul Gibbons the real superhero here?

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Even a Marvel Superhero Knows How Horrible Working at a Big 4 Firm Can Be
Accounting Endgame: Who Would Survive Thanos’s Snap?

The post Simu Liu Thanks Deloitte Canada For Canning Him 10 Years Ago Today appeared first on Going Concern.

After PM was ranked 91st out of 100 in last year’s BCTWF, we thought the firm was in danger of not making Fortune’s 2022 list. But the 13th-largest public accounting firm in the US came back strong this year, vaulting up to No. 30.

In the last five years, Plante Moran has been ranked:

• 2021: 91st
• 2020: 21st
• 2019: 21st
• 2018: 20th
• 2017: 51st

Here’s why Plante Moran made this year’s ranking, according to Fortune:

A strong company culture can engender employee loyalty—and Plante Moran, one of the nation’s largest audit, tax, consulting, and wealth management firm, puts a big emphasis on strong and consistent leadership. Of the company’s 3,307 employees, 98% say management is honest and ethical in its business practices, and 95% feel its executives fully embody the best characteristics of the company. “I love the focus on people as humans with psychological and emotional needs and how the company addresses those needs,” notes one staffer. Plante Moran offers flexible work schedules, regardless of position, and launched a diversity, equity, and inclusion council nearly 20 years ago, long before it was a hot topic.

Plante Moran also gave its employees a mid-year salary adjustment late last year, ranging from 3% to 6%, according to sources.

Stats of note:

• Employees: 3,307
• Number of job openings: 631 (as of March 2022)
• Number of job applicants (last 12 months): 20,487
• Average number of applicants per opening: 40
• Number of new graduates hired: 694
• Percentage of women: 49%
• Percentage of minorities: 11.1%
• PTO limit (days): N/A
• Number of sick days: Unlimited

We’ll continue our coverage of the Fortune 2022 BCTWF throughout this week.

Related article:

The Fortune 100 Best Companies to Work For: Deloitte #24 (2022)

The post The Fortune 100 Best Companies to Work For: Plante Moran #30 (2022) appeared first on Going Concern.

In the previous five years, Deloitte has been ranked:

• 2021: 34th
• 2020: 45th
• 2019: 26th
• 2018: 11th
• 2017: 64th

Here’s why Deloitte made this year’s ranking, according to Fortune:

The pandemic made Deloitte take its employees’ mental health more seriously. In January 2021, the global consulting and accounting firm launched mental health goals for its operations in every country to meet within 18 months. Deloitte also worked with HSBC, Unilever, Salesforce, and other big employers to create a business pledge on workplace mental health; its 100 signatories have promised to develop specific plans to improve their employees’ mental well-being and to create more open workplace cultures around discussing this aspect of health. Bust as the pandemic slowly recedes, Deloitte is wrestling with the workplace fallout from another global crisis: In March 2022, after Russia’s invasion of Ukraine stoked public pressure on big Western companies doing business with Vladimir Putin’s regime, all of the Big Four accounting firms announced they would cut ties with their Russian operations. Deloitte, which says its withdrawal from Russia and Belarus will affect about 3,000 employees, promised to “support all impacted colleagues during this transition”; a spokesperson declined to provide specifics about what the assistance will entail.

After a tumultuous 2020, which included mass layoffs, 2021 was a fairly normal year in D-town. The firm continued to make money hand over fist globally, employees not only received raises (good or bad, depending on which Deloitter you talk to) but many also received mid-year salary adjustments, and 169 overachievers finally got to sit at the big kids’ table.

But despite all of this, many people at Deloitte (and throughout public accounting) ran for the exits in 2021 for greener pastures during the Great Resignation, so Deloitte had to try and find some warm bodies to fill seats while also retaining the warm bodies it already has before they turn cold. Trying to hire back people who the firm fired in 2020 wasn’t a good hiring strategy; however, an effective retention strategy was Deloitte & Touche offering its auditing professionals (second-years through senior managers) a one-time retention bonus, with the amounts varying by level (either $20,000 or $35,000). Deloitte’s tax practice did the same, offering its seniors and managers a one-time $20,000 retention bonus. The bonus was paid out for D&Ters in January, while tax Green Dotters will get theirs this month. But there’s a catch: Those who took the retention bonus must now stay at Deloitte for the next two years. If they end up getting a new job and leaving the firm between now and then, they must pay the retention bonus back in full.

Stats of note:

• Employees: 79,478
• Number of job openings: 5,461 (as of March 2022)
• Number of job applicants (last 12 months): 759,723
• Average number of applicants per opening: 33
• Number of new graduates hired: 7,272
• Percentage of women: 43.7%
• Percentage of minorities: 42.7%
• PTO limit (days): 40
• Number of sick days: N/A

We’ll continue our coverage of the Fortune 2022 BCTWF throughout this week.

The post The Fortune 100 Best Companies to Work For: Deloitte #24 (2022) appeared first on Going Concern.

Beauzile, 61, a resident of South Plainfield, NJ, appeared by videoconference on Monday before US Magistrate Judge James B. Clark III and was charged by indictment with 10 counts of wire fraud. He was released on $200,000 unsecured bond.

From the halls of the Justice Department:

From 2001 through February 2021, Beauzile worked as controller, heading a New York-based company’s accounting department. On a monthly basis, from 2014 through December 2020, Beauzile issued company checks to himself, and deposited those checks into his personal bank account at bank branches in New York, near his employer’s headquarters.

Over the course of the scheme, Beauzile issued approximately 140 checks to himself totaling in excess of $2.3 million, which he used for his own benefit. Beauzile hid his scheme by failing to enter some of the checks into the victim company’s accounting system; causing checks to appear as though they were made payable to vendors when, in fact, Beauzile issued them to himself; changing the vendors invoices to correspond with the accounting of those checks; and falsifying the victim company’s bank account statements.

Each count of wire fraud is punishable by a maximum penalty of 20 years in prison and a maximum $250,000 fine, if he is convicted. We were unable to confirm whether this Gerard Beauzile who is a controller based in New York City is the one who was indicted today.

The post Your Naughty Corporate Controller of the Day appeared first on Going Concern.

#taxseason observations:
1. How do I pay my taxes?
2. Do I need to sign the efile forms and engagement letter?
3. How long will my refund take?
4. Why do I owe? I’ve never owed.
5. Why do you need to know that?
6. My previous account didn’t ask for that.#TaxTwitter

— Dan Herron (@fintaxdude) April 9, 2022

Me: You owe $500 due to ACTC.
Client: Ok cool, can we pay that from my refund?
Me: What?
Client: How much was my refund?#taxtwitter

— Mark Anderson (@MarkAnd18311787) April 10, 2022

Feb 6 Matt doesn't recognize April 10 Matt. I have worked more Sundays this year than the previous 15 combined. I'm not proud of it. #TaxTwitter https://t.co/OkqwGQWDM3

— Matthew J. Cordes, EA (@cordes_tax) April 10, 2022

7 client emails on a Sunday night the week before tax season ends, that light at the end of the tunnel better not be an oncoming train.

— StevenFCPA (@stevenfcpa) April 11, 2022

Tax season bingo card. Today on 4/10 I'm reading Form 4562 instructions. #NotNormal #TaxTwitter

— Lindsey Starrett, CPA, CCIFP (@LindseyStarrett) April 10, 2022

Maybe I’ll take pictures of the outraged look on last minute clients who think it’s “cute” to wait until the last minute to file , when I tell them they get an extension. #TaxTwitter

— AngiefromMP (@angiefrommp) April 10, 2022

Happy Sunday! It just took me 90 minutes to assemble ONE tax return. This better not come back to me as a REDO! I can't tell you how many returns have been redos already! SO MANY!!!! #taxtwitter #adminlife

— Sherry Schwenderlauf (@SherryPDX) April 10, 2022

i hit a wall

and then I just kept hitting it

im fine

— Andrea Carr CPA (@andreacpa0) April 10, 2022

Is there a way to make it April 19th when I wake up tomorrow morning? #TaxTwitter

— Thomas J Kaminski (@michigantaxpro) April 11, 2022

Today is March 772, 2020. It will never end. #taxtwitter

— Marchternity (@MarchternityBot) April 11, 2022

It’s Monday 8:36am and I’m already f**king tired of the “status” emails – yes I’m fully aware your return isn’t filed. If I had an update, I would have reached out. This is going to be a long end of this tax season – good luck to you all!!! #TaxTwitter

— Tyler Boxberger (@tbraves13) April 11, 2022

“I lost my tax documents. Can you send those to me?” Yep, next Wednesday. #taxtwitter

— Liz, CPA, PSA (NJ) (@LizDoogCPA) April 11, 2022

https://twitter.com/CJ_CPA_5/status/1513471925426786311

Client-100% going on extension-just uploaded a zillion documents. Including one marked"urgent IRS." It's a payroll tax notice dated 12/31/21. I do not do payroll.
Good morning #TaxTwitter

— Michele Cagan, CPA (@michelecagancpa) April 11, 2022

https://twitter.com/porkrind/status/1513512467321827334

Pretty clear I'm a liberal. I'm getting A LOT more, "I'm not giving the IRS that information" pushback to everything from crypto to HoH due diligence questions.

It's like, "Just let me do my damn job, people. This ain't political. This is me protecting my license." #TaxTwitter

— Adam Markowitz (@adammarkowitzEA) April 11, 2022

I’m sorry I haven’t given you any of my 2021 tax information. Can you just tell me how much I’m going to owe so I can make a payment? #TaxTwitter

— Gina DeRosa, CPA (@GinaDeRosaCPA) April 11, 2022

Clients finally reaching out to me on April 11 with "I would like to file an extension" as if there was ever going to be a scenario by this point in which they *weren't* going to file an extension. #TaxTwitter #taxseason

— Saint Landwalker (@SaintLandwalker) April 11, 2022

It's taking a lot of restrain to not reply to IRS tweets today, but I'm not choosing violence today.

— Matt Metras cryptotaxpro.eth (@EmDeeEm) April 11, 2022

We hope everyone is able to keep violence to a minimum this week, no matter how much you’d like to strangle some of your clients.

The post Busy Season Problems: Sunday Funday, Lost Tax Documents, In Need of Super Powers appeared first on Going Concern.

So in this Saturday shitpost, we ask: If KPMG was actually a radio station, what would its tagline or slogan be? We have a handful of suggestions:

• Good Auditing’s No. 1 Alternative
• Playing All the Hits (and Misses) of Auditing
• Formerly Phil Mickelson’s Favorite Country Station
• Clients’ Yacht Rock
• Where the Blues Are Here to Stay
• Your Station For Lakehouse Rock
• The Sound of (Scott) London
• We Make Our Clients Bang Their Heads

That’s a good start. Have a great weekend!

The post If KPMG Was a Radio Station, What Would Its Slogan Be? appeared first on Going Concern.

Anyhoo, based on all of the posts from butt-kissing Green Dotters (or not), Deloitte is one of LinkedIn’s top 50 companies in the US:

In honor of being named a LinkedIn Top Company , we want to know what has made Deloitte a great place to build your career?

— Life at Deloitte US (@lifeatdeloitte) April 6, 2022

Big D came in at No. 11, the highest among the Big 4 firms. EY was ranked the 22nd best company in the US, followed by PwC at No. 32. And poor KPMG didn’t make the list. KPMGers gotta up their cringey LinkedIn post game.

Related articles:

We Get It Lady, You Work For Deloitte
What’s Up With Deloitters and the LinkedIn Cult Mentality?

The post LinkedIn Must Have Noticed All of Those Cringey Posts About How Great It Is to Work At Deloitte appeared first on Going Concern.

• Deloitte: £854,000 (plus an extra £197,000 from the sale of its restructuring division)
• PwC: £868,000
• BDO: £760,000
• EY: £749,000
• KPMG: £688,000
• Grant Thornton: £611,000
• RSM: £500,000 (2020-21 financial year)

If we missed one, shoot us an email and let us know.

Grant Thornton’s UK profits rise by more than a third [Financial Times]

Related article:

So to Recap, Partners At the Largest Accounting Firms In the UK Are Swimming In Money

The post Updated List of Accounting Firm Average Partner Profits In the UK For 2021 appeared first on Going Concern.

It only took five years, but Scott Marcello finally received some sort of punishment for what happened in KPMG’s audit practice several years ago as partners were working with PCAOB insiders to illegally receive advanced notice of the PCAOB’s inspection plans for KPMG audits. Marcello, KPMG’s former vice chair of audit, was fined $100,000 today by the PCAOB under a new disciplinary category—“supervisory failures”—regarding KPMG getting and using confidential PCAOB inspection information. The $100,000 fine is the largest monetary penalty ever imposed by the PCAOB on an individual in a settled case.

“This ‘first of its kind’ disciplinary action demonstrates that the PCAOB is committed to sanctioning top-level personnel at the largest firms when they fail to take sufficient supervisory steps aimed at preventing violations by their subordinates,” PCAOB Chair Erica Williams said in a statement. “Following the Department of Justice’s and the Securities and Exchange Commission’s actions against the perpetrators of the scheme, the board believes it is important to hold Mr. Marcello accountable as their supervisor for contributing to a culture that led to this serious misconduct.”

Why Marcello was not named in the criminal indictment or never faced any discipline from the SEC or federal authorities, unlike five of his co-workers at KPMG, is one of the main unanswered questions in the KPMG/PCAOB scandal. After all, as the PCAOB noted today in its order, Marcello failed in his duty to supervise senior members of KPMG’s audit practice who unlawfully obtained and used that confidential PCAOB information. The PCAOB said:

Under Marcello’s supervision, several of his subordinates, including his direct report, KPMG’s National Managing Partner for the Professional Practice Group [that would be David Middendorf], obtained confidential lists of the audits that the PCAOB would select for review during its 2016 and 2017 inspections of KPMG. Marcello’s subordinates used the 2016 confidential information to enhance the audit documentation for the engagements on those lists in an attempt to improve KPMG’s inspection results. The conduct of Marcello’s subordinates violated PCAOB rules and securities laws related to the preparation and issuance of audit reports and the obligations and liabilities of accountants, including Commission rules.

For those of you who aren’t familiar with the scandal, the PCAOB does a nice job summarizing it in its order. And as you read through it, it really makes you scratch your head why Marcello wasn’t among those indicted. First, the PCAOB sets the stage for the fraud, and it all started because of how badly KPMG was sucking at auditing:

Between 2010 and 2014, the rate of deficiencies that the Board identified in the KPMG audits that it reviewed increased each year. More specifically, the percentage of inspected audits in which the Board found that KPMG had failed to obtain sufficient evidence to support its audit opinions (or had failed to fulfill the objectives of its role when it was assigned work by another auditor) steadily increased, from 22 percent in the 2010 inspection to 54 percent in the 2014 inspection.

Many of the deficiencies the Board identified during its inspections concerned KPMG’s audits of banks and, in particular, the KPMG engagement teams’ evaluation of allowances, i.e., reserves, that KPMG’s banking clients had recorded for potential losses in their loan portfolios.

In light of this inspection history, KPMG determined to take various steps to attempt to improve its results in future PCAOB inspections. One of those steps was to recruit to the Firm personnel from DRI [PCAOB Division of Registration and Inspections], including individuals who had participated in inspections of KPMG and had identified deficiencies in certain of the Firm’s audit work. In May 2015, KPMG hired Brian Sweet as a partner. Immediately prior to joining KPMG, Sweet worked in DRI. While at the PCAOB, Sweet, who had experience auditing and inspecting the audits of banks, was part of the team that inspected KPMG.

Marcello, who was deputy leader of KPMG’s Financial Services practice, was appointed vice chair of audit in July 2015, two months after Sweet joined KPMG from the PCAOB. In his new role, Marcello supervised KPMG’s audit practice, which included the Department of Professional Practice (DPP), headed by Middendorf. DPP included an inspections group responsible for overseeing KPMG’s participation in PCAOB inspections. Thomas Whittle, who reported to Middendorf, headed this inspections group. David Britt, another partner in KPMG’s DPP and the co-leader of the firm’s Banking and Capital Markets group, reported to KPMG’s chief auditor, who, in turn, reported to Middendorf.

Sweet also became part of DPP’s inspections group, and he recruited Cynthia Holder, a former colleague from the PCAOB, to join him at KPMG. And so the malfeasance begins:

Between 2015 and February 2017 (both before and after Marcello became Vice Chair of Audit), Middendorf, Whittle, Britt, Sweet, and Holder obtained and used confidential PCAOB inspection information to improve KPMG’s inspection results, including for banking clients. The scheme included using an employee at the PCAOB to provide confidential lists of PCAOB inspection selections and inspection focus areas so that KPMG could target resources to those audits in advance of PCAOB inspections.

In March 2016, Holder obtained from a PCAOB inspector, Jeffrey Wada, a list of several KPMG issuer clients, mostly banks, whose audits the PCAOB intended to review as part of its 2016 inspection of the Firm. Holder shared the 2016 Inspection List with Sweet, who, in turn, informed Middendorf, Whittle, and Britt of it.

Upon receiving that confidential information, Middendorf, Whittle, and Britt instructed Sweet and others to perform examinations of the audit work papers for seven banking clients on the 2016 Inspections List outside of KPMG’s normal processes. The reviews consisted of partners outside of the engagement teams re-reviewing the audit work papers of the seven banking clients after KPMG’s audit reports had been issued for those clients, but before the respective documentation completion dates for the audits. The re-reviews uncovered problems with audit documentation as well as concerns about substantive audit issues, which Middendorf, Whittle, and the others attempted to have addressed in hopes of improving KPMG’s inspection results.

In early February 2017, Holder again received from Wada a confidential list, this time the entire list, of the KPMG audits that the PCAOB intended to review as part of its 2017 inspection of the Firm (the “2017 Inspections List”). Holder shared the 2017 Inspections List with Sweet, who promptly informed Middendorf, Whittle, and Britt of it.

Both times (2016 and 2017) Holder received the inspection lists from Wada, who also hoped at the time to be a KPMGer one day, Middendorf told Marcello about it. And both times Marcello turned a blind eye to what was going on, and what was about to happen, until people he confided with told him what they were doing was crazy and wrong:

In March 2016, Marcello learned from Middendorf that KPMG had obtained advance information about certain PCAOB inspection selections of KPMG audits. Specifically, Marcello understood that KPMG had obtained information about PCAOB inspection selections or potential selections through Sweet’s contacts at the PCAOB, which Marcello should have recognized was inappropriate. At the time, Marcello also understood that for all of the selections, which included the Firm’s audits of several banks, the documentation completion date for the final assembly of work papers had not passed. Marcello further understood that KPMG personnel intended to review the work papers for those audits and could enhance the documentation in an effort to improve inspection results.

Despite knowing that Middendorf and others had received advance notice of certain inspection selections and intended to review and could enhance work papers for those audits, Marcello failed to take appropriate action in response. Marcello did not report or escalate the matter, or instruct Middendorf and other subordinates to refrain from using the PCAOB’s confidential information. In failing to take action in response to learning about the receipt and intended use of confidential information in 2016, Marcello missed an opportunity to change the tone at the top of the Firm, which could have helped prevent further violations.

On February 7, 2017, Middendorf reported to Marcello that Sweet had obtained a list of 2017 PCAOB inspection selections. Marcello understood that the list had come from someone inside the PCAOB. Marcello, however, again failed to respond appropriately, including by failing to promptly report the receipt of that highly confidential information to anyone at KPMG or the PCAOB. Instead, over the course of a week, he and Middendorf had several conversations about the list and what to do with the information, though they agreed that no one should use the information while they decided what to do with it.

Marcello ultimately reported the receipt of the confidential information, but only after he learned of others’ negative reaction to KPMG having the information. First, Marcello learned from Middendorf that KPMG’s Chief Auditor had a very negative reaction to learning that Sweet had obtained the confidential inspection information. Second, Marcello also learned from Middendorf that a professional practice partner likewise had a very negative reaction to learning that KPMG had obtained confidential PCAOB inspection information. Finally, two partners who had learned of the issue from the professional practice partner informed Marcello of additional details concerning the situation and that they were troubled by KPMG having the list and would report the issue themselves if Marcello did not. After that meeting Marcello escalated the issue, reporting it to KPMG’s in-house counsel on February 14, 2017, a week after learning of KPMG’s receipt of the confidential 2017 Inspections List.

At that point, the whole scheme began to crumble. Before the confidential information from the 2017 inspections list could be used, one of the engagement partners, Diana Kunz, who had been informed by Sweet that the PCAOB was planning to review her audit, recognized that KPMG shouldn’t be in possession of this information. Kunz then contacted a supervisor, who told somebody else, and ultimately, KPMG’s Office of General Counsel was informed and began an internal investigation.

Marcello, Middendorf, Sweet, Holder, Whittle, and Britt were all fired from KPMG on April 11, 2017. Then on Jan. 22, 2017, everyone except Marcello, who we have nicknamed “the KPMG 5,” were indicted for their roles in the scandal. Wada, the leaker from the PCAOB, also was indicted.

Holder pleaded guilty to one count of conspiracy to defraud the United States, one count of conspiracy to commit wire fraud, and two counts of wire fraud on Oct. 16, 2018. She was sentenced to eight months in federal prison on Aug. 9, 2019 .Holder reported to jail on Oct. 15, 2019, and served her sentence at a minimum security federal prison camp for women in Bryan, TX. She was released from custody on June 13, 2020.

Middendorf was sentenced on Sept. 11, 2019, to one year and one day in federal prison, exactly six months after he was convicted by a jury on three counts of wire fraud and one count of conspiracy to commit wire fraud. Middendorf is currently appealing his conviction.

Whittle pleaded guilty to wire fraud and conspiracy charges on Oct. 29, 2018. He was sentenced in December 2020 to two years of supervised release.

Britt pleaded guilty to one count of conspiracy to commit wire fraud on Oct. 3, 2019. He was sentenced in October 2020 to six months of home confinement which was completed on June 6, 2021.

Sweet was sentenced on Nov. 20, 2020, to time served, three years of probation, and had to pay “significant” restitution of an unknown amount. He pleaded guilty in 2018 to conspiracy and wire fraud charges as part of a plea deal with the government.

Wada was given a nine-month jail sentence in October 2019 after he was found guilty by a jury in March 2019 of one count of conspiracy to commit wire fraud and two counts of wire fraud. He also appealed his conviction.

In June 2019, KPMG paid a $50 million penalty to the SEC for illegally using the PCAOB inspections information, as well as for auditors cheating on training exams, which was a whole separate mess. KPMG also had to pay a $1.3 million fine to the California Board of Accountancy for both of those transgressions.

So as you can see, Erica Williams has done more in her three months as PCAOB chair than William Duhnke did in three and a half years in that role.

The post Better Late Than Never: PCAOB Fines Ex-KPMG Vice Chair of Audit Scott Marcello $100,000 In Connection With Inspection Scandal appeared first on Going Concern.

And in an article posted over the weekend about the trip, the Financial Times hinted that it probably wasn’t cheap (EY revives the big-budget corporate shindig with Florida theme park trip):

EY this week flew more than 2,000 staff and their companions to Florida for a shindig at a Universal Studios theme park, in a sign that big-budget corporate bonding events are coming back after the pandemic.

Pictures shared by the Big Four accounting firm’s newly promoted partners on social media showed them enjoying a fireworks display, a gala dinner at the Marriott Hotel and rollercoaster rides such as Escape from Gringotts, modelled on the goblin-run bank in Harry Potter.

Making partner at EY is a HUGE professional accomplishment, no doubt, and it should be celebrated. And EY has been hosting these global new partner get-togethers for years but not the last two because of the pandemic. So for the first time, the firm celebrated two new global partner classes—2020 and 2021—at one weekend event. The event included training sessions, business updates, and keynote speeches by the firm’s leaders and external speakers, FT reported.

The thing is, sending its new Americas partners to this weekend retreat while being the only Big 4 firm in the US not to give their employees at least a small spike in pay before the holidays or right after is a bad look for EY and leaves a bad taste in the mouths of EY employees, like this person who posted on r/accounting yesterday:

So nice that they decided to send the new partners (and last year’s partners who missed out) as well as their entire families to Orlando for their milestone.

Meanwhile, the firm continues to fall behind in paying employees anywhere near the increasing market rates in a red-hot job market, and as a result they keep bleeding employees causing chronic understaffing and burnout for those who remain. Oh, and still no word about reinstating or making it up to employees who missed out on their milestone trips (manager and senior manager promotees from the last two years, and those who received offers as interns).

And have you seen some of the posts on LinkedIn and Instagram from the new EY US partners who went to Florida? They would make the most ardent EY Kool-Aid drinker gag in their mouth a little bit.

(CONT’D)

(CONT’D)

Remember when EY said not paying out employees’ accrued vacation and going all PTO, all the time would save the firm $36 million annually? And EY US is already a multibillion business (nearly $16.2 billion in revenue for FY 2021, according to Accounting Today). So couldn’t EY pay for this trip for new Americas partners AND throw the rest of its US employees a bone? Yep.

EY revives the big-budget corporate shindig with Florida theme park trip [Financial Times]

The post This Might Be the Reason Why EY Employees Did Not Get a Mid-Year Salary Adjustment appeared first on Going Concern.

So who has the edge in tonight’s match-up? You could say Kansas because they are a No. 1 seed, had more regular season wins than the Tar Heels, and won their conference (UNC didn’t). However, North Carolina is on a high after beating Duke and could carry that momentum into tonight’s game. But forget about their records. Forget about which teams they beat to get to the championship game. And forget about which team was seeded lower than the other. The team who has the edge in tonight’s game is the one with … the most players majoring in accounting.

But after scanning both teams’ rosters this morning, there are a grand total of zero players on both Kansas and North Carolina who are majoring in accounting. OK, how about finance or even business? You know the tall forward with the longish hair and bushy beard on the Tar Heels, Brady Manek? He was a graduate student transfer this season. Manek was a four-year starter at the University of Oklahoma and graduated with a degree in business administration/management. So that’s one for North Carolina? Does it even count because Manek didn’t get his bachelor’s degree from the University of North Carolina?

It doesn’t even matter. Kansas has two players—guard Michael Jankovich and forward Dillon Wilhite—who are majoring in finance, while guard Charlie McCarthy is a business major with an emphasis in finance.

Edge: Jayhawks. Who do you got winning tonight’s game?

The post Team With No Accounting Majors Takes On Another Team With No Accounting Majors For Men’s College Basketball Supremacy appeared first on Going Concern.

But today I wanted to bring to your attention a blog post from National Taxpayer Advocate Erin Collins. We’ve written in the past about the antiquated technology at the IRS (remember the catastrophic system failure on Tax Day 2018?), and things aren’t much better there four years later.

And you know what is screwing the IRS the most right now? Paper tax returns. Yes, people still do their taxes on paper! In fact, according to Collins’s blog post yesterday, the paper return backlog stood at nearly 15 million as of March 18. Fifteen million! If only there was some piece of technology that could help these poor overworked souls at the IRS process these paper returns. Something like, oh I don’t know, a scanner:

The reason paper returns are so challenging is that the IRS still has not implemented technology to machine read them, so each digit on every paper return must be manually keystroked into IRS systems by an employee.

It doesn’t have to be that way. During the past two decades, state tax agencies have been using scanning technology to automate the processing of paper tax returns. During that time, the IRS has considered, rejected, proposed, reconsidered, partially implemented, and deferred the question of whether to implement scanning technology.

Yesterday, I issued a Taxpayer Advocate Directive (TAD) directing the IRS to work with the tax software industry to implement 2-D barcoding for next filing season. The TAD also directed the IRS to implement optical character recognition (OCR) or similar technology for next filing season if possible or, if not, for the following filing season.

Collins wrote that even though the pandemic has caused delays for some taxpayers who e-filed their returns, the overwhelming majority of lengthy delays have been experienced by taxpayers who filed original returns on paper or who have filed amended returns, which are generally processed as paper returns even when submitted electronically. Last year, the IRS received nearly 17 million paper 1040s, over 4 million 1040-X forms, and millions of paper business returns. She continued:

The delays in processing these returns result from the IRS’s archaic data intake process. The IRS’s submission processing function today evokes images of what data transcription looked like in the 1960s – prior to the information age. Employees manually transcribe all paper tax returns. Transcription consists of keystroking each digit and each letter on the return. For a moderately complex return, several hundred digits may need to be transcribed. For longer returns with more forms and schedules, the number of digits may approach or exceed 1,000 digits.

In the year 2022, this doesn’t just seem crazy. It is crazy.

“Crazy” isn’t a strong enough word to describe it, Erin. How about we use two words: fucked up.

Getting Rid of the Kryptonite: The IRS Should Quickly Implement Scanning Technology to Process Paper Tax Returns [National Taxpayer Advocate Blog]

Related articles:

#TaxTwitter Has Absolutely Had It With Clients’ Sh*t
The IRS Has the Mother of All Nightmare Legacy Systems

The post Busy Season Problems: Somebody Please Get the IRS a Damn Scanner appeared first on Going Concern.

According to the Justice Department:

For the years 2012 through 2016, Garvin prepared and filed with the IRS individual income tax returns on which he claimed false deductions and expenses associated with rental properties he owned, fictitious real estate taxes on his personal residence and made-up charitable contributions. On his 2013 tax return, Garvin also deducted nearly $16,000 in false expenses associated with his employment with the U.S. Army Reserves. Although Garvin was formerly a member of the U.S. Army Reserves, he did not perform any reservist duty in 2013 and was not entitled to deduct any expenses related to that employment. In total, Garvin admitted to causing a loss to the IRS of more than $74,000.

Court documents also show that after the IRS began an audit of Garvin’s 2013 and 2014 tax returns, Garvin attempted to obstruct the audit by submitting fictitious documents to the IRS. For example, to justify the false deductions and expenses on his tax returns, Garvin created and submitted receipts from a church, invoices from a contractor and a letter from the Department of the Army. After learning he was under criminal investigation, Garvin later submitted some of the same fraudulent documents to IRS-Criminal Investigation.

Garvin is scheduled to be sentenced on July 6. In addition to facing a maximum of five years in prison, he also faces a period of supervised release, restitution, and monetary penalties.

The post Your Naughty IRS Employee of the Week appeared first on Going Concern.

Crowe

The latest audit inspection results for Crowe show the 11th-ranked public accounting firm by revenue bombed 27% of the audits reviewed in the most recent PCAOB inspection cycle, but the firm was less bad in its 2020 report card than it was in 2019’s.

PCAOB inspectors selected 15 audits to dissect and found problems in just four. That’s better than the results in Crowe’s 2019 inspection report, which revealed Crowe auditors failed half of the 14 audits inspected.

Of the four wayward audits in Crowe’s 2020 inspection report, three had deficiencies in both financial statement audits and the audit of internal control over financial reporting. Of the internal control audit failures, Crowe was dinged the most for not performing sufficient testing of the design and/or operating effectiveness of controls selected for testing. On the financial statement audit side, Crowe got called out for not sufficiently evaluating significant assumptions or data that the issuer used in developing an estimate.

Across the four botched audits, inspectors revealed that only two auditing standards weren’t followed correctly: AS 2501, Auditing Accounting Estimates, and AS 2201, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements.

Moss Adams

After looking at the results of Moss Adams’s last three PCAOB inspection reports, you can conclude that auditors at the 12th-ranked public accounting firm are consistent with how many audits they screw up. In the 12 audits inspected in 2020, 11 in 2019, and 10 in 2018, Moss Adams failed three audits in each of those three years. But as the PCAOB has selected one more audit to inspect in each of those years, Moss Adams’s error rate has gotten better: 30% in 2018, 27% in 2019, and 25% in 2020.

In Moss Adams’s latest report, inspectors found errors with the audit of ICFR in only one of the three botched audits, while all three exhibited problems with the financial statement audit. The most erroneous part of the financial statement audit was auditors not performing sufficient testing related to an account or significant portion of an account or to address an identified risk. Issuer A was the most problematic for Moss Adams auditors as inspectors identified multiple deficiencies in the financial statement and ICFR audits related to revenue, accounts receivable, and inventory. For example, mistakes made under inventory included:

The issuer performed cycle counts of inventory held at certain locations. The following deficiencies were identified:

• The firm did not identify and test any controls over the issuer’s monitoring of its cycle-count program. (AS 2201.39)
• The firm selected for testing certain cycle-count controls that it assessed as having a higher risk of failure. To test the design and operating effectiveness of these controls, the firm selected a sample of cycle counts. The firm observed a small number of these counts and, for certain of the remaining counts, inquired of the issuer’s personnel and inspected cycle-count documentation. The firm’s procedures for the unobserved counts did not provide sufficient appropriate audit evidence given the assessed higher risk associated with these controls. (AS 2201.46)
• The firm did not perform any substantive procedures to test the existence of inventory held at certain of these locations. (AS 2301.08)

The firm selected for testing a control that consisted of the issuer’s review and approval of the reserve for excess and obsolete inventory. The firm did not identify and test any controls over the accuracy and completeness of the reports that the issuer used in the operation of this control. (AS 2201.39)

The PCAOB notes that of the three deficient audits, one was for an issuer in the energy sector, one was in the financials sector, and one was for an issuer in the IT sector.

Marcum

Of the three firms highlighted in this post, Marcum’s 2020 inspection report was by far the worst—like BDO USA-level bad. And Marcum’s audit quality has gotten worse over the last three years. The 15th-ranked public accounting firm’s deficiency rate has deteriorated from 30% in 2018 to 50% in 2019 to a horrendous 64% in 2020.

Marcum auditors didn’t do too badly on audits of ICFR. It was financial statement audits that were a nightmare, as the firm blew nearly every one of them. Eight of the nine failed audits contained problems in the audit of financial statements. The litany of errors included:

Issuer A looked like it was a fun client—fun for us as observers but not so much for Marcum auditors:

Type of audit and related areas affected

In our review, we identified deficiencies in the financial statement and ICFR audits related to Revenue and Inventory.

Description of the deficiencies identified

With respect to Revenue at one of the issuer’s business units:

The firm did not identify and test any controls over the accuracy and completeness of the shipment information from the system that the issuer used to record revenue. (AS 2201.39)

The firm selected for testing controls that consisted of the issuer’s review of sales orders. The firm used the results of its substantive testing of this revenue as evidence that these controls were operating effectively. The firm’s procedures did not provide sufficient appropriate audit evidence because the firm did not directly test the review procedures that the control owners performed. (AS 2201.42, .44, and .B9)

The firm selected for testing a control that consisted of the issuer’s review of the calculation of the rebate accrual. The firm did not identify and test any controls over the accuracy and completeness of the system-generated reports used in the operation of this control. (AS 2201.39)

With respect to Inventory at one of the issuer’s business units:

The firm did not identify and test any controls that addressed the issuer’s determination of the cost of its inventory and whether the amounts relieved from inventory and recorded to cost of goods sold were accurate. (AS 2201.39)

The firm selected for testing the issuer’s daily cycle-count control over the existence of this inventory. The small number of cycle-counts that the firm selected for testing did not provide sufficient appropriate audit evidence in light of the frequency of the operation of the control. (AS 2201.46)

The firm selected for testing a control that consisted of the issuer’s review of the reserve for excess and obsolete inventory. The firm did not identify and test any controls over the accuracy and completeness of the system-generated report used in the operation of this control. (AS 2201.39)

Due to the deficiency related to the cycle-count control discussed above, the firm did not obtain sufficient appropriate audit evidence that the cycle-count procedures the issuer used for this inventory were sufficiently reliable to produce results substantially the same as those that would have been obtained by a count of all items each year. (AS 2510.11)

The PCAOB called out the most failures in the following five auditing standards: AS 1105, Audit Evidence; AS 2201, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements; AS 2502, Auditing Fair Value Measurements and Disclosures; AS 2510, Auditing Inventories; and AS 2810, Evaluating Audit Results.

Better luck next time, Marcum.

The post How Did Crowe, Moss Adams, and Marcum Do In Their Respective 2020 PCAOB Inspection Reports? appeared first on Going Concern.

TIL Deloitte Canada had a former Canadian professional footballer in its partnership.

Gabriel Gervais, 45, who joined Deloitte of the Canadian variety in 2009 and was admitted into the partnership in 2019, played for the Montreal Impact (now CF Montréal in the MLS) from 2002-08 when the club was part of the United Soccer League. He helped lead the Impact to a championship in 2004 and was named to the USL Division 1 All-League First Team for six consecutive years from 2002-07. Gervais also earned USL Division 1 Defender of the Year three times. He scored seven goals during his career with the Impact, and he also made 11 appearances earned 11 caps between 2004-07 with Canada’s national team.

Gervais’ career as a Green Dotter officially came to an end yesterday as CF Montréal introduced him as the club’s new president and CEO. He posted this message on his LinkedIn page earlier today:

CF Montréal is winless in four games (0-1-3) so far this season in the MLS. Here’s a short video CF Montréal put together four years ago highlighting Gervais’ career with the Impact:

The post CF Montréal Poaches Someone From Deloitte and Issues a Press Release, Part I appeared first on Going Concern.

When you get a 5% raise but remember inflation is 7.9% pic.twitter.com/lgGtd96xvq

— Not Jerome Powell (@alifarhat79) March 28, 2022

Related articles:

PwC Briefcases Look Absolutely Stunning On the Oscars Red Carpet
Happy Fifth Anniversary of PwC F*cking Up the Oscars

The post Tweet of the Day: Raises, Inflation, and Will Smith appeared first on Going Concern.

The two regulators made public a combined total of 52 (34 from the SEC and 18 from the PCAOB) accounting and auditing enforcement actions in 2021, down from 63 in 2020 and WAY lower than the 117 disclosed in 2016. In fact, total accounting and auditing enforcement has been in a downward spiral since 2016:

• 2016: 117
• 2017: 88
• 2018: 83
• 2019: 82
• 2020: 63
• 2021: 52

OK we should cut the enforcement staff some slack because of the pandemic, which has been to blame for the lack of enforcement actions against audit firms and individuals the last two years, Cornerstone Research believes, as well as the recent changes in leadership at both the SEC and the PCAOB. Gary Gensler was sworn in as SEC chairman last April, and the PCAOB was an absolute mess during William Duhnke’s reign of terror as PCAOB chairman, which lasted from January 2018 until Gensler fired his ass last June. Hopefully the new chair, Erica Williams, will get things straightened out over there.

And since 2016, in both years when a new SEC chairman has been sworn in (2017, Jay Clayton and 2021, Gensler), SEC enforcers weren’t as busy as in other years:

It’s not as cut and dry for the PCAOB, but the year Duhnke was sworn in (2018) had the third lowest amount of enforcement actions in the last six years. Actually, as I look at the bar graph from Cornerstone Research, PCAOB accounting and auditing enforcement actions were lower in the four years under Duhnke than in 2016 and 2017 when James Doty was at the helm of the PCAOB:

In a speech last December at the AICPA & CIMA Conference on Current SEC and PCAOB Developments, PCAOB enforcement director Patrick Bryan admitted that 2021 was “a challenging year in terms of enforcement, with the continued work from home environment” and that “the ongoing effects of the pandemic, the inability to travel, certainly had an impact on some of our investigations, particularly oversees investigations where travel was really necessary for us to advance those cases meaningfully.” But he also expects enforcement activity at the PCAOB to rebound in 2022, as enforcement staff “has worked very hard to develop a strong pipeline,” and he added, “Our teams have done a terrific job advancing cases in this environment. We anticipate making a number of recommendations early in the year. So I think 2022 will hit the ground running and certainly not have the slow start that we experienced this past year.”

The folks at Cornerstone Research weren’t really surprised by the overall decline in the level of enforcement activity in 2021, but they were surprised by the sharp drop in settlements. “The median settlement by firms in SEC enforcement matters was only $200,000, which means that half of the accounting and auditing cases that settled last year were for that amount or less,” said Elaine Harwood, report co-author, senior vice president, and head of Cornerstone Research’s accounting practice.

In 2021 SEC settlements totaled $158 million, of which $151 million were against companies. The total monetary settlements against individuals nearly doubled since 2020 to $7 million. The highest settlement was $62 million (Kraft Heinz in September), well below the maximum settlement in either 2019 or 2020. In 11 of the 49 settlements, the SEC reported that it considered the respondent’s self-reporting, cooperation, and/or remedial efforts as it set penalties and other sanctions.

Of the 34 SEC enforcement actions in 2021, 19 referred to announced restatements and five referred to announcements of material weaknesses in internal control over financial reporting. The two most common allegations, each involving one-third of the total actions, related to a company’s revenue recognition and internal accounting control violations, according to Cornerstone Research.

At the PCAOB, of the 15 individuals and 11 accounting firms that settled with the audit cops in 2021, monetary settlements were imposed on 18 (69%). Monetary settlements totaled approximately $1.1 million. And despite pandemic-related restrictions on travel, the percentage of PCAOB actions involving non-US respondents in 2021 (33%) returned to pre-pandemic levels and was comparable to the 2016-2019 average (31%).

The post SEC and PCAOB Enforcers Took An Extended Smoke Break In 2021 appeared first on Going Concern.

Hopefully the PwC briefcases’ handlers have a better night at the Oscars tonight than Brian Cullinan and Martha Ruiz did five years ago.

Related article:

Happy Fifth Anniversary of PwC F*cking Up the Oscars

The post PwC Briefcases Look Absolutely Stunning On the Oscars Red Carpet appeared first on Going Concern.

Knowing there had to be a No. 3 on his list of things he hates, I took the bait and clicked to read his entire post. Does he also hate famine? Poverty? The pandemic? Cancer? Nope.

I hate to break it to you, Soufyan, but in these turbulent times, there won’t be peace on Earth, there won’t be goodwill to all men and women, and people won’t stop using merged cells in Excel.

The post War and Racism Are the Only Things Worse Than This, Says Guy appeared first on Going Concern.

According to published reports, psychiatrists at Bellevue Hospital in Manhattan determined after a medical evaluation that Martial Simon, the homeless man who killed 40-year-old Deloitte Consulting Senior Manager Michelle Go while she was waiting for a train inside the Times Square subway station on Jan. 9, is mentally unfit to stand trial.

Simon, 61, didn’t appear in court for a status hearing on March 22. He has been held at Bellevue since he was arrested and charged with second-degree murder in Go’s death.

The New York Post reported yesterday:

Prosecutors requested two weeks to review Simon’s mental-health evaluation, but his attorney Mitchell Schulman expects Manhattan District Attorney Alvin Bragg’s office will “confirm” the findings, meaning Simon would be locked up at a mental health hospital.

The judge adjourned the case until April 19. The Daily Mail reported that a trial could begin at a later date if Simon regains mental competency and is able to understand court proceedings and the charges brought against him. That decision would be made at a later hearing.

Simon, who served two stints in state prison for robbery and attempted robbery, has been diagnosed with schizophrenia and has been in and out of mental hospitals for more than 20 years, family members have said.

Go, who graduated from UCLA with a bachelor’s degree in economics and then earned her MBA from NYU Stern School of Business, was a senior manager, strategy and operations, M&A at Deloitte Consulting, according to her LinkedIn profile. She joined Deloitte in 2018. After leaving her apartment on the Upper West Side on the morning of Jan. 9, Go was shoved from behind by Simon onto the subway tracks in front of an incoming southbound R train. The attack was unprovoked and law enforcement authorities are investigating whether to charge Martial with a hate crime.

A candlelight vigil for Go was held in Times Square on Jan. 18.

Man accused of fatally shoving Michelle Go unfit to stand trial, court official says [New York Post]
Homeless ex-convict accused of pushing Deloitte executive Michelle Go onto subway tracks and killing her deemed ‘mentally unfit’ for trial by psychiatrists at Bellevue Hospital [Daily Mail]

Related articles:

RIP Michelle Go, Deloitte Consulting Senior Manager Who Was Murdered In NYC Subway
Scenes From the Candlelight Vigil In Honor of Deloitte Consulting Senior Manager Michelle Go

The post Homeless Guy Who Murdered Deloitte Consulting Senior Manager Michelle Go Won’t Be Going to Trial Anytime Soon appeared first on Going Concern.

ICYMI:

Need to vent here. I’m a busy season intern and can’t stand a January-hire staff 1 I work with on one of my engagements. He asks me how to do tasks (he had a previous internship already) and comes to me with a problem in excel almost everyday (barely knew ctrl c,v). That stuff I can get past, but he will not shut up about WLB! Have not had a single conversation where he hasn’t brought up how everyone works too many hours, he is constantly telling seniors and even a manager that they need to take breaks and log off early for mental health and wlb. He complained to senior (who is too nice) so much that they gave him two nights a week where he logs off at 6, he openly brags about how he will never take CPA exams, and openly admits that he will leave PA within 1-2 years and is a chronic oversharer/never shuts up while working in office. I get I’m an intern and I’m lucky to have a great team so I’m pretty shielded but I’m still working 65+hrs/week and am really enjoying the work. I can’t stand talking to this staff1, it makes me sick but he’s on my team so I have to pretend we get along. Doubting anyone will read all the way to the end so vent over lol

You would think Mr. First Year’s annoying behavior would necessitate him being pushed out the door sooner than the one- to two-year time frame he set for himself. But the unfortunate part is, with so many Big 4 firm offices and teams understaffed and overwhelmed right now, Mr. First-Year could walk into a partner’s office, take a dump on his desk, flip him the bird as he walks out of the office pantsless, and still probably keep his job. As long as he has a pulse, he stays.

But good on the intern for telling it like it is. Any other interns working with dopey first-years this busy season? Let us know, either in the comments or shoot us an email or text using the contact info below. Any comments by email or text will be kept anonymous.

The post You Know Things Are Bad In Public Accounting When First-Years Are Getting Dragged By Interns appeared first on Going Concern.

The study, Fool Me Once, Shame on You; Fool Me Twice, Shame on Me: The Long-Term Impact of Arthur Andersen’s Demise on Partners’ Audit Quality, which was published in Contemporary Accounting Research, concluded that:

[A]udit partners who directly experienced Andersen’s demise impose stricter monitoring evident in their clients exhibiting a lower propensity for misstatements and small profits, and paying higher audit fees. Importantly, these findings reconcile with research in finance and economics implying that firsthand experiences matter more to subsequent behavior than general economic conditions or second- or thirdhand experiences. Collectively, the results shed light on one facet of how partners’ audit quality evolves over time. Our findings suggest that major failures associated with the audit firm in which an auditor works can ultimately result in these affected individuals later delivering higher audit quality, which should benefit audit committees in partner selection decisions and audit firms in designing partner assignment policies.

The six university researchers who authored the study compared recent audits by 199 former Arthur Andersen employees—who are now partners at PwC, Deloitte, KPMG, and EY—to recent audits by 1,446 of their peers by examining Forms AP on the PCAOB website. Here’s a breakdown of the 199 ex-Andersen partners who currently work in the Big 4:

• PwC: 21
• Deloitte: 52
• EY: 59
• KPMG: 67

The researchers stated:

In compiling our sample, we match Form AP data downloaded from the PCAOB’s website with the audit partner’s LinkedIn profile where available. We restrict the sample to clients of Big 4 audit firms since partners formerly affiliated with Andersen now working at a non–Big 4 audit firm might not be comparable to non–Big 4 audit firms’ other partners who were not initially recruited at the start of their career by Big 4 audit firms, making it difficult to disentangle the effects of personal experiences from differences in talent and the effects of different recruiting strategies.

The researchers then used three proxies that correlate with audit quality: the propensity to misstate the financial statements, the propensity to meet or just beat the zero earnings threshold, and audit fees. Here’s what stood out:

[T]he likelihood of misstatements, identified by a subsequent restatement of the audited annual financial statements, is 0.8% for AA partners’ clients and 2.3% for those audited by non-AA partners. We find that the propensity to report small profits (a sign that a company is manipulating earnings to avoid reporting a loss), on average, is 12% for AA partners’ clients, which is significantly lower than the frequency for clients audited by non-AA partners (14.8%). These results lend preliminary support to the narrative that partners who directly experienced Andersen’s demise exhibit a more conservative auditing style. Audit fees of clients audited by an AA partner are 4.4% larger than those of clients with a non-AA partner.

As I mentioned earlier, the researchers concluded, based on their evidence, that “major failures associated with the audit firm in which an auditor works can ultimately result in these affected individuals later delivering higher audit quality. This should alert audit committees to the importance of weighing whether to appoint an auditor who has perhaps been tainted by, but not directly involved in, such an event. Similarly, these results should matter to audit firms’ recruitment, promotion, and retention decisions.” And the researchers said their analysis could benefit audit firms attempting to design optimal partner assignment policies. For example:

[A]udit firms may prefer to assign partners who experienced Andersen’s demise to clients known to undertake more aggressive financial reporting positions. Relevant to the public policy discourse, our research lends support to the movement toward requiring the disclosure of engagement partner identities since this may provide valuable information to the capital markets.

You can read the entire study below:

Contemporary Accting Res – 2022 – Guo – Fool Me Once Shame on You Fool Me Twice Shame on Me the Long‐Term I… by Jason Bramwell on Scribd

The post Study: Ex-Arthur Andersen Audit Partners Do Not Deserve to Get Shredded appeared first on Going Concern.

PwC Ireland has hired Robert Costello from KPMG to lead its newly established capital projects and infrastructure team. PwC said Costello would scale up the firm’s offering in the area in Ireland, which includes recruiting a number of senior professionals with a broad range of financial and analytical skills. He started at KPMG Ireland in October 2006 as a manager and worked there for two years before transferring to KPMG in Australia, where he spent four and a half years as an associate director in the firm’s corporate finance team in Sydney. Costello rejoined KPMG in Dublin in 2013 as an associate director and moved his way up the ranks to director in 2014 and managing director in 2020. In a post on LinkedIn, Costello said he “had the privilege of working on some of the most significant infrastructure projects in Ireland and Australia and count myself very lucky to have been afforded the opportunity to join the corporate finance team back in 2006. I am very proud of the role we played in making projects happen over the years.” [Irish Times/LinkedIn]

Speaking of KPMG in Australia, Elizabeth Shaw just left there to become a partner at PwC’s office in Perth, where she will help grow P. Dubs’ diversity and inclusion consultancy business nationally and advise organizations on people, change, culture, diversity, and inclusion. Shaw has experience designing and implementing diversity, inclusion, and cultural change initiatives across resources, government, and corporate clients and leading several high-profile Australian non-government organizations. Shaw had been an associate director within KPMG’s management consulting practice where she led its D&I division. She worked at KPMG for seven years. [Consultancy.com.au/LinkedIn]

The post PwC Poaches Someone From KPMG and Issues a Press Release, Parts X and XI appeared first on Going Concern.

This year’s edition is a landmark publication for more reasons than one, as it marks 25 years of Deloitte Football Money League and covers the first season (2020/21) to be impacted by COVID-19 from start to finish.

[…]

The 2020/21 football season began, and ended, where the 2019/20 season left off: with the devastating impact of COVID-19 continuing to be felt around the world. Football, and sport more widely, was resilient, but not immune with clubs balancing obligations in respect of health and safety in order to fulfil fixtures and provide entertainment and ultimately complete the 2020/21 season.

Despite these ongoing challenges the football industry continued to demonstrate its resilience offering respite to many in such testing times … but the impact of COVID-19 is stark with the lack of fans in stadia unsurprisingly causing the lowest matchday revenue in the 25 years of the publication, whilst broadcast revenue is at a record high as a result of deferrals in distributions related to the delayed 2019/20 season (completed in the 2020/21 financial year).

According to the report, matchday revenue totaled only €111 million for 2020-21, but broadcast revenue totaled €4.6 billion, a €1.4 billion increase from 2019-20. Total revenue generated by the 20 Money League clubs was €8.2 billion, up less than 1% from 2019-20 but more than €1 billion lower than the €9.3 billion generated in 2018-19. And one other thing: Money League clubs have missed out on well over €2 billion of revenue over the 2019-20 and 2020-21 seasons because of the Rona, Deloitte says in the report.

But you’re not interested in this report for all the doom and gloom. You wanna know if your favorite club is among the 20 richest in the world. First, here’s a breakdown of the 20 Money League clubs by league:

• English Premier League: 11
• La Liga: 3
• Serie A: 2
• Bundesliga: 2
• Ligue 1: 1
• Russian Premier League: 1

For the first time ever, Manchester City, the reigning Premier League champs, topped the Money League with revenue of £571.1 million (€644.9 million), a pretty big leap for a team that placed sixth in last year’s report (€549.2). Behind City is Real Madrid, which generated the most revenue (€640.7 million) out of the clubs in La Liga. Barcelona, which was No. 1 in 2019-20 (€713.4), fell three spots to fourth (€582.1 million) in Deloitte’s latest report, Barça’s lowest position since the 2013-14 season. 2021 Bundesliga champ Bayern Munich is third (€611.4 million) and is the richest club in that league. Paris Saint-Germain is sixth (€556.2 million) and the top revenue-generating team in Ligue 1. (Protip: you can watch PSG matches—past and present—as well as all Ligue 1 matches on the beIN SPORTS Extra channel on the Pluto free streaming app.) FC Zenit generated the most revenue among clubs in the Russian Premier League (€212 million), coming in at No. 19.

Four EPL clubs—Wolverhampton (first time ever), Aston Villa, Leicester City, and West Ham United—cracked the Money League top 20 this year, while Schalke 04 (Bundesliga), Olympique Lyonnais (Ligue 1), SSC Napoli (Serie A), and Eintracht Frankfurt (Bundesliga) fell out of the top 20. Here’s a graphic from Deloitte that shows the 20 Money League clubs for 2022:

You can also find which clubs finished 21st to 30th in total revenue in the report, which you can download here.

The post Here Are the 20 Richest Football Clubs In the World, According to Deloitte appeared first on Going Concern.

Of the 20 employment categories, the Big 4 aren’t ranked in half of them. EY-Parthenon, which came in at No. 5 in the best consulting firm to work for rankings (the highest among the Big 4), was ranked in the other 10 categories, finishing no higher than 10th (health and wellness). Deloitte Consulting, the most prestigious of the Big 4 consulting practices, was included as one of the best consulting firms in only two categories. KPMG turned up in just one (formal training), while PwC Advisory Services/Strategy& didn’t appear in any of them. Hell, Armanino, which the only people who know has a consulting practice are the people who work there, ended up ranked in two categories.

To come up with this ranking, Vault surveyed consultants and asked them to rate their own firm across 20 factors that affect their daily working lives. The firms were then ranked in each category based on the average rating assigned by their own consultants. Each factor has a top 25 firm ranking. So how did the Big 4 do?

Benefits

NOT RANKED [That bad, huh?]

Compensation

13. EY-Parthenon

Diversity

18. EY-Parthenon

Culture

NOT RANKED [Toxic cultures usually don’t make “best of the best” rankings.]

Leadership

NOT RANKED [The tone is set at the top, as they say.]

Formal training

15. EY-Parthenon
21. Deloitte Consulting
25. KPMG Advisory

Health and wellness

10. EY-Parthenon
22. Deloitte Consulting

Hours in the office

NOT RANKED [The Big 4 will never be among the best firms in this category, obvs.]

Informal training

19. EY-Parthenon

Innovation

NOT RANKED [The Big 4 are old firms stuck in their old ways.]

Interaction with clients

19. EY-Parthenon

Internal mobility

NOT RANKED [A little surprised the Big 4 weren’t ranked here. Maybe better upward mobility in other service lines than consulting?]

International opportunities

21. EY-Parthenon

Level of challenge

16. EY-Parthenon

Overall business outlook

22. EY-Parthenon

Promotion policies

12. EY-Parthenon

Relationships with supervisors

NOT RANKED [Misery loves company.]

Satisfaction

NOT RANKED [Underpaid and overworked employees make for low job satisfaction.]

Selectivity

NOT RANKED [Not sure why the Big 4 wouldn’t be ranked here, tbh.]

Work-life balance

NOT RANKED [Definitely sure why the Big 4 weren’t ranked here.]

As mentioned, Armanino came in 20th in diversity and 11th in innovation. Even the advisory practice of BPM, the 46th ranked public accounting firm by revenue in INSIDE Public Accounting’s 2021 top 400 firms, came in at No. 25 in the health and wellness category.

You can find the full Vault rankings here.

Related articles:

Vault 50: Only One Big 4 Firm’s Consulting Arm Made the Top 10 (2022)
Vault 50: Deloitte Consulting Still Has the Prestige Factor Going For Them (2022)

The post Vault Consulting 50: How Did the Big 4 Do In Key Employment Categories? (2022) appeared first on Going Concern.

Michaels reported that last year the SEC’s office in Miami sent letters to each of the Big 4 firms as well as some smaller accounting firms “seeking information about client work that could cause auditors to violate rules requiring they be independent of clients whose finances they inspect,” sources told the WSJ.

The article also says:

In the current investigation, the SEC has asked audit firms to disclose instances to regulators in which the firms provided services such as consulting, tax advice, and lobbying to audit clients, according to the people familiar with the matter. The SEC also asked for information on any cases in which audit firms obtained contracts that reimburse them for losses caused by lawsuits over their work, or made fees contingent on a particular result or outcome, they say.

We’re not sure what exactly spurred the SEC to all of sudden investigate these conflicts of interest at the Big 4. The regulator already has auditor independence rules etched in stone that prohibit audit firms from providing non-audit services to an audit client, including its affiliates, such as:

• Bookkeeping
• Financial information systems design and implementation
• Appraisal or valuation services, fairness opinions, or contribution-in-kind reports
• Actuarial services
• Internal audit outsourcing services
• Management functions or human resources
• Broker-dealer, investment adviser, or investment banking services
• Legal services and expert services unrelated to the audit

But as we all know, auditor independence rules are a farce. Can you really, truly be independent if the client is paying you, the audit firm, millions of dollars a year to review its financials? Then when auditors do their jobs correctly by, say, issuing an internal control material weakness, their clients don’t like that and they don’t want investors to know about that, and then things can get messy.

And because auditor independence rules are a farce, audit firms will still try to find some sliver of gray area in the rules to sneakily sell non-audit services to their audit clients. Sometimes they get caught, but the fines the SEC gives them for breaking the rules are a farce too, with the highest one being $8.2 million to KPMG in 2014. Here are some examples over the past 10 years:

A Few EY Partners Didn’t Get the Auditor Independence Rules Right (Dec. 15, 2021)
While EY wasn’t punished, the SEC on Dec. 10 fined former principal Philip Hurak $20,000, former partner Alan Greenwell $15,000, and current principal Adam Bering $10,000 for their roles in the firm providing tax credit and incentive services to an audit client, Cintas Corp., on a contingent fee basis between July 2009 and August 2018. SEC rules stipulate that an audit firm is not independent of its audit client if it provides any non-audit services to the audit client for a contingent fee. As a result, EY was not independent of Cintas during that time period, the SEC said.

PwC Fined $7.9 Million By the SEC for Making Pretty Dumb and Obvious Independence Violations (Sept. 23, 2019)
PwC agreed to pay nearly $8 million and partner Brandon Sprankle $25,000 to settle charges of improper professional conduct and violating auditor independence rules, which were mostly due to failures in PwC’s independence-related quality controls. In summary, the SEC said:

PwC violated the SEC’s auditor independence rules by performing prohibited non-audit services during an audit engagement, including exercising decision-making authority in the design and implementation of software relating to an audit client’s financial reporting, and engaging in management functions. In connection with performing non-audit services for 15 SEC-registered audit clients, the order states that PwC violated Public Company Accounting Oversight Board (PCAOB) Rule 3525, which requires an auditor to describe in writing to the audit committee the scope of work, discuss with the audit committee the potential effects of the work on independence, and document the substance of the independence discussion. According to the SEC order, PwC’s actions deprived numerous issuers’ audit committees of information necessary to assess PwC’s independence. As further detailed in the order, the violations occurred due to breakdowns in PwC’s independence-related quality controls, which resulted in the firm’s failure to properly review and monitor whether non-audit services for audit clients were permissible and approved by clients’ audit committees.

RSM US’s $950,000 Fine Is a Reminder That Performing Non-Audit Services for Audit Clients Can Get You Into Trouble (Aug. 27, 2019)
According to the SEC, “from 2014 to 2015, RSM US or its associated entities, including other member firms of the RSM International network, provided non-audit services to, and had an employment relationship with, affiliates of RSM US audit clients, which violated the SEC’s auditor independence rules. The prohibited non-audit services included corporate secretarial services, payment facilitation, payroll outsourcing, loaned staff, financial information system design or implementation, bookkeeping, internal audit outsourcing, and investment adviser services.”

The audit clients included funds of eight registered investment advisers seeking to comply with the SEC’s Custody Rule, the employee benefit plans of three public companies that filed reports with the SEC on Form 11-K, two broker-dealers, and two public companies.

EY Is In Trouble With the SEC For Lobbying On Behalf of Audit Clients (July 14, 2014)
Because the SEC is currently investigating whether firms are providing lobbying services to audit clients, here’s an instance when EY got busted for doing just that:

The Securities and Exchange Commission today charged Ernst & Young LLP with violations of auditor independence rules that require firms to maintain their objectivity and impartiality with clients.

Ernst & Young agreed to pay more than $4 million to settle the charges.

The SEC’s order instituting a settled administrative proceeding finds that an Ernst & Young subsidiary [Washington Council EY] lobbied congressional staff on behalf of two audit clients. Such lobbying activities were impermissible under the SEC’s auditor independence rules because they put the firm in the position of being an advocate for those audit clients. Despite providing the prohibited legislative advisory services on behalf of the clients, Ernst & Young repeatedly represented that it was “independent” in audit reports issued on the clients’ financial statements.

ALSO: Are Ernst & Young’s Lobbying Activities a Violation of Auditor Independence Rules? (March 9, 2012)

The SEC is Not Pleased With KPMG’s Independence (Jan. 24, 2014)
As mentioned above, KPMG was given the biggest fine to date by the SEC, $8.2 million, for providing prohibited non-audit services to audit clients. In this instance, KPMG offered non-audit services, such as bookkeeping and expert services, to affiliates of companies whose books they were auditing. In addition, some KPMGers also owned stock in companies or affiliates of companies that were KPMG audit clients, further violating auditor independence rules.

The SEC said at the time:

According to the SEC’s order instituting settled administrative proceedings, KPMG repeatedly represented in audit reports that it was “independent” despite providing services to three audit clients that impaired KPMG’s independence. The violations occurred at various times from 2007 to 2011.

According to the SEC’s order, KPMG provided various non-audit services – including restructuring, corporate finance, and expert services – to an affiliate of one company that was an audit client. KPMG provided such prohibited non-audit services as bookkeeping and payroll to affiliates of another audit client. In a separate instance, KPMG hired an individual who had recently retired from a senior position at an affiliate of an audit client. KPMG then loaned him back to that affiliate to do the same work he had done as an employee of that affiliate, which resulted in the professional acting as a manager, employee, and advocate for the audit client. These services were prohibited by Rule 2-01 of Regulation S-X of the Securities Exchange Act of 1934.

We now know that, in the last situation mentioned above, KPMG had a “loan staff arrangement” with General Electric, its longtime audit client, but that arrangement had ended sometime in 2012.

See, these fines from the SEC are just a drop in the bucket for multibillion-dollar firms like the Big 4. So to summarize: auditor independence rules are a farce, fines to the Big 4 and other firms for auditor independence violations are a farce, and this new SEC investigation will probably be a farce too.

Big Four Accounting Firms Come Under Regulator’s Scrutiny [Wall Street Journal]

The post The SEC Only Gives Out Wrist-Slaps to the Big 4 When They Break Independence Rules On Providing Non-Audit Services to Audit Clients appeared first on Going Concern.

In the public accounting bracket, Century Group provides salary expectation ranges for nine positions—four in audit and five in tax—covering the 25th to 75th percentiles and based on firm/company revenue. There are four firm/company size indicators in the salary guide:

• $1 – $50 million
• $51 million – 500 million
• $501 million – $1 billion
• Over $1 billion

Employee percentiles are defined by Century Group as:

• 25th percentile: candidate has little or no prior experience in the position; still developing relevant skills; low demand.
• 50th percentile: candidate has average experience; has the majority of the necessary skills; moderate demand.
• 75th percentile: candidate has above-average experience and most or all of the necessary skills; may have specialized certifications; high demand.

Here are the projected base pay ranges for the nine roles in public accounting included in Century Group’s 2022 Salary Guide:

Audit partner

$1 – $50 million

• 25th percentile: $181,239
• 50th percentile: $226,549
• 75th percentile: $271,858

$51 million – $500 million

• 25th percentile: $211,693
• 50th percentile: $251,882
• 75th percentile: $294,094

$501 million – $1 billion

• 25th percentile: $238,301
• 50th percentile: $272,049
• 75th percentile: $309,898

Over $1 billion

• 25th percentile: $250,687
• 50th percentile: $313,358
• 75th percentile: $376,030

Audit senior manager

$1 – $50 million

• 25th percentile: $120,537
• 50th percentile: $150,671
• 75th percentile: $180,805

$51 million – $500 million

• 25th percentile: $133,009
• 50th percentile: $166,261
• 75th percentile: $199,514

$501 million – $1 billion

• 25th percentile: $145,481
• 50th percentile: $181,851
• 75th percentile: $218,222

Over $1 billion

• 25th percentile: $151,089
• 50th percentile: $188,861
• 75th percentile: $226,633

Audit manager

$1 – $50 million

• 25th percentile: $109,579
• 50th percentile: $136,974
• 75th percentile: $164,369

$51 million – $500 million

• 25th percentile: $120,917
• 50th percentile: $151,147
• 75th percentile: $181,376

$501 million – $1 billion

• 25th percentile: $132,256
• 50th percentile: $165,319
• 75th percentile: $198,383

Over $1 billion

• 25th percentile: $134,901
• 50th percentile: $168,626
• 75th percentile: $202,351

Audit senior

$1 – $50 million

• 25th percentile: $77,689
• 50th percentile: $97,111
• 75th percentile: $116,533

$51 million – $500 million

• 25th percentile: $84,469
• 50th percentile: $105,586
• 75th percentile: $126,703

$501 million – $1 billion

• 25th percentile: $91,249
• 50th percentile: $114,061
• 75th percentile: $136,873

Over $1 billion

• 25th percentile: $92,161
• 50th percentile: $115,201
• 75th percentile: $138,242

Tax partner

$1 – $50 million

• 25th percentile: $181,239
• 50th percentile: $226,549
• 75th percentile: $271,858

$51 million – $500 million

• 25th percentile: $213,106
• 50th percentile: $253,564
• 75th percentile: $296,058

$501 million – $1 billion

• 25th percentile: $237,193
• 50th percentile: $270,783
• 75th percentile: $308,457

Over $1 billion

• 25th percentile: $250,687
• 50th percentile: $313,358
• 75th percentile: $376,030

Tax senior manager

$1 – $50 million

• 25th percentile: $121,111
• 50th percentile: $151,388
• 75th percentile: $181,666

$51 million – $500 million

• 25th percentile: $127,328
• 50th percentile: $159,160
• 75th percentile: $190,992

$501 million – $1 billion

• 25th percentile: $134,451
• 50th percentile: $168,064
• 75th percentile: $201,677

Over $1 billion

• 25th percentile: $137,798
• 50th percentile: $172,247
• 75th percentile: $184,551

Tax manager

$1 – $50 million

• 25th percentile: $109,263
• 50th percentile: $136,579
• 75th percentile: $163,894

$51 million – $500 million

• 25th percentile: $116,905
• 50th percentile: $146,131
• 75th percentile: $175,358

$501 million – $1 billion

• 25th percentile: $124,547
• 50th percentile: $155,684
• 75th percentile: $186,821

Over $1 billion

• 25th percentile: $127,648
• 50th percentile: $159,559
• 75th percentile: $191,471

Tax senior

$1 – $50 million

• 25th percentile: $82,952
• 50th percentile: $90,657
• 75th percentile: $100,676

$51 million – $500 million

• 25th percentile: $84,645
• 50th percentile: $92,507
• 75th percentile: $102,730

$501 million – $1 billion

• 25th percentile: $86,372
• 50th percentile: $94,395
• 75th percentile: $104,827

Over $1 billion

• 25th percentile: $88,531
• 50th percentile: $96,755
• 75th percentile: $107,448

Tax staff

$1 – $50 million

• 25th percentile: N/A
• 50th percentile: N/A
• 75th percentile: N/A

$51 million – $500 million

• 25th percentile: $67,867
• 50th percentile: $73,415
• 75th percentile: $86,162

$501 million – $1 billion

• 25th percentile: $71,788
• 50th percentile: $78,085
• 75th percentile: $88,992

Over $1 billion

• 25th percentile: $76,876
• 50th percentile: $84,018
• 75th percentile: $93,303

For more information, here is our previous coverage of 2022 accounting salary projections.

The post How Are Public Accounting Salaries Stacking Up For 2022? (Part 5, Century Group) appeared first on Going Concern.

While we await KPMG’s punishment for that whole Carillion debacle, the Financial Reporting Council announced on March 8 that it had fined the House of Klynveld £1,250,000 and former KPMG audit director Michael Frankish £50,000 for mishaps in the 2015 and 2016 audits of Revolution Bars, a company that operates a chain of bars in the UK. Because KPMG and Frankish admitted to their failings and cooperated with the FRC investigation, their fines were reduced to £875,000 and £35,000, respectively.

With this latest punishment for shoddy auditing, KPMG has been fined a total of £18,550,000 (reduced to 16,875,000) by the FRC since last August (see Silentnight and Conviviality). You read that correctly: nearly £17 million IN THE LAST SIX MONTHS. Here’s what the FRC had to say about this most recent train wreck of an audit by KPMG:

The failings relate to three specific areas of the Audits: supplier rebates and listing fees; share-based payments; and (for FY2016 only) deferred taxation. The Company’s financial statements for FY2015 and FY2016 contained various misstatements which had to be corrected, some of which arose from the three areas mentioned, and some of which were material to the financial statements as a whole.

Consequently, the Audits failed to achieve their principal objective of providing reasonable assurance that the financial statements were free from material misstatement.

The failings in respect of supplier rebates and listing fees were aggravated by the fact that the FRC had made auditors aware, through publications in 2014 and 2015, that such complex supplier arrangements were an area of particular audit risk and would be a focus of its inspection activity.

In determining the sanctions to be imposed, Executive Counsel has taken into account that these were serious breaches but were not intentional, dishonest, deliberate or reckless, and that the Respondents provided a good level of cooperation during the investigation, including making early admissions in respect of the breaches. In addition, regard was had to Mr Frankish’s good prior disciplinary record and that he was a Director at the time of the work in question and not a partner.

Jamie Symington, Deputy Executive Counsel to the FRC, said:

“KPMG’s failings in this case persisted for two years and across multiple areas. They included complex supplier arrangements which the FRC had previously identified as an area of regulatory focus, albeit that in this case their impact on the financial statements was minor. The audit client was a newly listed and relatively small company, but the breaches were nevertheless serious, including lack of professional scepticism. The FRC has required KPMG and Mr Frankish to take action to mitigate or prevent breaches recurring. The package of financial and non-financial sanctions should help to improve the quality of future audits.”

Frankish, who was the engagement partner for the Revolution Bars audits, left KPMG after 20 years with the firm in 2017 for Grant Thornton where he is currently an audit partner. KPMG was told by the FRC to analyze the underlying causes of the breaches of relevant audit standards, identify and implement any remedial measures necessary to prevent a recurrence, and to update the FRC of its progress.

The post In Non-Russia-Ukraine War News, KPMG UK Screwed Up Another Audit appeared first on Going Concern.

In the firm’s statement, Mazars Group CEO Hervé Hélias said:

It has been over a week now that we have been horrified by the dramatic and shocking events following the invasion of Ukraine by Russian state troops, which have led to a serious war situation in Europe. A week where we have watched our staff running from their bombarded office or homes to find a shelter; or escaping with their children and families to reach neighbouring countries where other Mazars colleagues offer hospitality. We are appalled by the humanitarian tragedy and the major threat this violation of international law poses to peace in Europe and beyond.

Throughout the week, we have kept in contact with our Ukrainian teams and tried to help them in every way that we can. Mazars stands strongly against an indefensible war, which brings only death, fear, pain, uncertainty, and distress. Everywhere.

As many other companies, we are trying to navigate the devastating consequences of this war and to do the right thing.

Protecting our staff and their families was and remains our priority. We have set up a permanent direct line of communication to our 120 local staff based in Ukraine. We immediately provided them with finance and are working with Mazars colleagues in neighbouring countries to welcome and support those who have escaped: organising transportation, accommodation, providing psychological and legal support, helping families with job searches, and providing spaces in our offices for our staff to work. And we have made the commitment that our group will support our Ukrainian staff whatever it costs.

We are also conscious of the concern and distress of our 500 staff in Russia, also victims. They face dreadful uncertainties, and we continue to support them.

Ensuring the continuity of our clients’ vital operations. Amazingly, despite the terrible conflict, our Payroll Outsourcing team in Ukraine organised to deliver pay to all of our clients’ staff, so that each and every individual has some resource for immediate needs. They have been heroic, and we cannot express our admiration enough; we truly admire their courage and professionalism. Others in the team have also sought to continue their services wherever they can.

Internationally, Mazars complies with all applicable sanctions and we have taken the appropriate actions. We also assist our international clients to assess the impact of this war on their operations.

But Hélias concluded his statement by saying the firm’s status in Russia could change as Mazars is “learning and making critical decisions every day, always with the aim of supporting our people and continuing to serve our clients the best we can; willing to do the right thing.”

Is this enough? Certainly not. This is not a situation we predicted, nor one we are used to dealing with. We are learning and making critical decisions every day, always with the aim of supporting our people and continuing to serve our clients the best we can; willing to do the right thing. The world will not be same after this tragic escalation. The consequences on international business are huge and not easy to foresee. There will be decisions to make. We will try to make the right ones, and at all times put the wellbeing of our people first.

Mazars opened in Russia in 1995 and has offices in Moscow, Saint Petersburg, and Togliatti. The firm has two offices in Ukraine—one in Kyiv and the other in Lviv—and has had a presence in that country since 2003.

The post For Now, Mazars Seems to Be Staying Put In Russia appeared first on Going Concern.

The statement also addressed BDO’s presence in Russia and Belarus going forward. Here is the firm’s statement in full:

The humanitarian crisis in Ukraine continues to dominate our thoughts and actions.

Our priority continues to be the safety of our colleagues and their families in Ukraine. Our focus is providing financial assistance, transportation, accommodation, safe passage, where possible, and ongoing employment for when they’re ready. BDO firms across the world have come together to support our colleagues and find solutions to help mitigate the immediate humanitarian crisis that is engulfing the region.

Our focus on carefully coordinated support for our people needs to be backed up by carefully considered policy:

1. No BDO firm will work with any sanctioned Russian and Belarussian entities including the Russian and Belarussian Government, Russian and Belarussian state-owned enterprises and sanctioned individuals as a consequence of the ongoing situation in Ukraine.
2. BDO does not have a network firm in Russia. The former Russian member firm operates entirely independently under the name of Unicon.
3. BDO is removing BDO Belarus from its global network. We will work to support our clients in fulfilling our legal obligations and commitments.

These changes are effective immediately. Implementation may take longer as we need to ensure an orderly transition. We will discharge our professional responsibilities and obligations to all relevant parties.

Since the outset, we have stated that we deplore the violation of international law and military aggression in all its forms. That continues to be our position and we hope that the loss of life and livelihood soon ceases and that all parties come together to establish an enduring peace.

BDO

City A.M. noted today that Unicon is not currently a part of BDO’s global network after BDO divorced itself from the Russian firm last year due to a conflict of interest. According to the website Archyde, the conflict of interest arose when BDO became the global auditor of the German IT company SAP. Unicon was already a technology partner of SAP in Russia, therefore auditor independence could be violated, Vladislav Pogulyaev, CEO of Unicon, said last September.

Archyde reported:

Cooperation with BDO will continue, but in a different format, says Pogulyaev: Unicon will not be a member of the network, but will receive the status of a member of the global alliance. This will preserve all the advantages of participation in the international network, namely the right to use intellectual resources: methodology and a global knowledge base, special audit IT applications, Pogulyaev lists. The BDO network itself will no longer be able to receive from mutual projects the same amount of payments and rewards from the transfer of clients to Russia. This meets the requirements of independence, he added.

BDO told City A.M. in a statement that “[a]ll clients and opportunities with Russian links are being referred to BDO Global and we will be reviewing our approach on an individual basis.”

Founded in 1997, BDO Belarus was previously part of the KPMG network. BDO didn’t say whether its firm in Belarus would still be a part of BDO’s global alliance.

The top six global accounting firms by revenue have now pulled out of Russia and some from Belarus too: Deloitte, PwC, EY, KPMG, BDO, and Grant Thornton.

The post BDO Says It Is No Longer Doing Business In Russia and Belarus appeared first on Going Concern.

The statements from PwC Russia and EY Russia are pretty much what you’d expect—acknowledging they were leaving their firm’s global empire, blah blah blah, the transition is expected to be smooth and the global firm HQ said it would support our employees, blah blah blah, we will continue to provide high-quality services to our clients, blah blah blah.

First up, PwC Russia:

PwC Russia is leaving the network of PwC member firms, but will continue cooperation.

The decision was taken after extensive consultations with the Global leadership team.

PwC Russia is a team of 3,700 employees in 11 cities and has worked in Russia for more than 30 years.

This transition is expected to be smooth and the PwC Global leadership team has stressed that it would make every effort to support our Russian colleagues and firm through the process.

The principles and rules of working with clients in Russia will remain unchanged.

We are confident in the business of the Russian firm. Our main competitive advantages are highly professional employees dedicated to their work and vast experience in applying the highest quality standards of auditing and consulting which continue to be highly valued by our clients.

And now EY Russia’s statement on Monday:

Today, EY global organization decided that the Russian practice will continue working with clients as an independent group of audit and consulting companies that are not part of the EY global network. The changes will take effect after the required transition period.

EY in Russia is a team of 4,700 professionals working in 9 cities of the country. The company has been operating in the Russian market for more than 30 years. During this time, the Russian practice has developed extensive expertise and built a team of highly qualified professionals in audit, technology and business consulting, transaction services, tax and legal services, and gained experience in implementing most complex projects.

EY Russian practice is providing and will continue to provide services to all its clients in accordance with high quality standards based on international methodologies developed by the global organization, which will continue to provide methodological support to Russian practice.

EY global organization assured that it would provide assistance to Russian employees.

We are confident that our clients will support us, and we will continue mutually beneficial cooperation on both current and new projects, and will continue to successfully develop the Russian practice.

As of now, KPMG Russia and Deloitte Russia have not released statements about being cut from the global networks of Deloitte and KPMG.

But the process of completely shedding their Russian-member firms will take the Big 4 some time, according to the Wall Street Journal.

For at least some of the firms, finalizing their exit will likely take months, according to people close to the Big Four. And the repercussions of their move may last for years.

[…]

Senior leaders at the four accounting giants are still scrambling to work out the details of their departure from Russia, the people close to the firms said. Firms in the Big Four networks operate as separate legal entities in each country, using a common global brand and bound by an agreement that governs arrangements such as the sharing of certain intellectual property.

The Russian members of their international networks will now have to set up under different brands. The transition from the networks to stand-alone status involves everything from dealing with regulators and transferring documents, to advising clients and working out what to do with staff on secondment to Russia.

“It’s fiendishly complicated,” another of the people close to the firms said. “The whole process is going to take a few months.”

Big Auditors to Leave Russia Amid Invasion of Ukraine [Wall Street Journal]

Related articles:

And Deloitte Makes Four
EY Joins Big 4 Exodus From Russia
Reports: PwC Is Withdrawing From Russia and Belarus
KPMG Is Pulling the Plug On Its Operations In Russia and Belarus
Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients?
Grant Thornton Drops Its Russian Affiliate Over Conflict In Ukraine
Ex-Big 4 Partner On Why the Big 4 Firms Should Pull Out of Russia: ‘It’s the Right Thing to Do and You Know It’

The post Here Is What PwC Russia and EY Russia Said About Being Ousted From Their Big 4 Firm’s Global Network appeared first on Going Concern.

Renjen said:

Last week, Deloitte announced it was reviewing its business in Russia. We will separate our practice in Russia and Belarus from the global network of member firms. Deloitte will no longer operate in Russia and Belarus.

While we know this is the right decision, it will have an impact on Deloitte’s ~3,000 professionals located in Russia and Belarus. Like others, we know our colleagues in Russia and Belarus have no voice in the actions of their government. We will support all impacted colleagues during this transition and do all we can to assist them during this extremely difficult time.

We will continue to prioritize the needs of our people and clients while we bring the full strength of Deloitte’s global resources to bear in addressing the mounting humanitarian needs in Ukraine and across Europe.

We will honor our commitments and obligations to global financial markets and multiple regulatory bodies.

A couple takeaways from Renjen’s statement:

1. Deloitte joins KPMG as publicly saying they not only are severing ties with their affiliates in Russia but also in Belarus, a country that has been a key ally to Russia during its invasion of Ukraine. While PwC’s statement doesn’t mention Belarus, the Financial Times reported yesterday that PwC Belarus was also leaving the firm’s network. EY’s official statement didn’t mention the status of its firms in Belarus.
2. While EY’s statement this morning said the firm “will no longer serve any Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world,” Deloitte’s statement today doesn’t say that—and neither did the statements released by PwC and KPMG yesterday. However, in a statement on March 2, Deloitte did say it “does not serve any entities of Russia’s Central Government.”

So now that the Big 4 and Grant Thornton have said they are exiting Russia, who’s next among the top global accounting firms with offices in Putinville? BDO? RSM (this might have already happened; still working on confirmation)? Mazars? Crowe? Baker Tilly?

Related articles:

EY Joins Big 4 Exodus From Russia
Reports: PwC Is Withdrawing From Russia and Belarus
KPMG Is Pulling the Plug On Its Operations In Russia and Belarus
Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients?
Grant Thornton Drops Its Russian Affiliate Over Conflict In Ukraine
Ex-Big 4 Partner On Why the Big 4 Firms Should Pull Out of Russia: ‘It’s the Right Thing to Do and You Know It’

The post Deloitte Joins the Rest of the Big 4 to Cut Ties With Russian Clients appeared first on Going Concern.

EY released the following statement earlier this morning:

As the shocking and abhorrent war in Ukraine continues to escalate, our priority continues to be the safety of our people in Ukraine, Eastern Europe and across the region, and actively supporting those impacted. We continue to support our 700 EY colleagues with financial support, relocation, transportation and immigration services. In addition, the entire global EY family has come together to offer refugee support, including logistical assistance, volunteer work and financial donations to the wider Ukrainian community.

In light of the escalating war, the EY global organization will no longer serve any Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world. EY has commenced a restructuring of its Russian member firm to separate it from the global network.

This is not something we take lightly. This is heart-breaking as we have over 4700 colleagues in Russia, who have been a part of our global network for over 30 years and worked side by side with our global, Eastern European and Ukrainian colleagues. As we go through this change, we will work to support those colleagues, as well as our clients in fulfilling our legal obligations and commitments.

The resulting suffering of this conflict across Ukraine, Eastern Europe and elsewhere is deeply concerning to all of us at EY. We strongly encourage all parties to urgently work towards a peaceful resolution in Ukraine.

But the one big difference between EY’s statement and the ones released by PwC and KPMG on Sunday is this part: EY global organization will no longer serve any Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world. In their statements yesterday announcing they were severing ties with their Russian-member firms, neither PwC nor KPMG said anything about ending their relationships with Russian government clients or state-owned companies. However, in a post on LinkedIn last week, Jon Holt, CEO of KPMG UK, wrote there will be client relationships that will be ending due to the situation in Ukraine, although he didn’t mention Russia by name. He said: “We are reviewing and adapting our client work and operations to align with sanctions and comply with all new laws. This will mean ending some of our client relationships in the UK and globally. The situation is fast-moving and is being kept under close review on a daily basis.”

As the Financial Times noted today, the Big 4 are structured as networks of locally owned partnerships with most of the profits retained in each country, meaning their Russian operations will continue to exist as stand-alone entities under new names. They just won’t have the cache of the Big 4 brand name behind them anymore or resources from the network of the Big 4 firm they were previously affiliated with.

Also, it’s worth noting that KPMG is the only Big 4 firm that publicly announced it was divorcing itself from its affiliate in Belarus, a country that has been a key ally to Russia during its invasion of Ukraine. While PwC’s statement doesn’t mention Belarus, the Financial Times reported yesterday that PwC Belarus was also being kicked out of the firm’s network. EY’s official statement didn’t mention the status of its firms in Belarus.

It’s been quite the turn of events over the last week, as up until yesterday, Deloitte was the only one of the Big 4 that announced it was “currently reviewing our business and presence in Russia,” hinting last week that it was considering cutting ties with its member firm there. Now its biggest competitors have left Deloitte in the dust. Not one to be left out of the party, Deloitte is probably crafting its “we’re leaving Russia” statement as we speak.

Related articles:

Reports: PwC Is Withdrawing From Russia and Belarus
KPMG Is Pulling the Plug On Its Operations In Russia and Belarus
Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients?
Grant Thornton Drops Its Russian Affiliate Over Conflict In Ukraine
Ex-Big 4 Partner On Why the Big 4 Firms Should Pull Out of Russia: ‘It’s the Right Thing to Do and You Know It’

The post EY Joins Big 4 Exodus From Russia appeared first on Going Concern.

Here is a screenshot of what Tretyak wrote on LinkedIn. A 29-second video recording of the damage accompanies his post:

In another post on LinkedIn last Thursday, Tretyak wrote that PwC Russia “keeps numb and silent” about Russia’s invasion of Ukraine and is a firm “where a number of my fellow Ukrainians work, the colleagues with whom we used to cooperate on multiple projects and initiatives, the people with whom we used to have lots of fun.”

He asked his PwC colleagues and the firm’s leadership in Russia to “go out loud and stand up together with all of us to help protect and safeguard our freedom and democracy from the #Russianaggression—for the sake of #Ukraine, #Russia, the #EU and the whole civilized World. Together we’ll stop this war and emerge even stronger as never before. Get the urge to raise your voice and break the chains of this #Russianterror.”

PwC yesterday announced its firm in Russia was leaving the PwC network. That was followed later Sunday and today by KPMG, EY, and Deloitte also saying they were divorcing themselves from their affiliates in Russia. Tretyak said on LinkedIn that PwC pulling out of Russia was a “truly brave and right step demonstrating our firm’s values and purpose in action and supporting freedom and democracy” and added that he hoped PwC would also end its affiliation with its firm in Belarus. While PwC’s official statement doesn’t mention Belarus, the Financial Times reported yesterday that PwC Belarus was also leaving the firm’s network.

Tretyak continued: “Now it’s crucial to keep focusing as much as we can on helping the people of Ukraine (including PwC employees/partners) and other peoples of the planet who have been devastated by this Russian terrorist war (supported by Belarus).”

Related article:

Reports: PwC Is Withdrawing From Russia and Belarus

The post PwC Ukraine’s Forensic Leader OK After His Home Was Hit By a Russian Missile appeared first on Going Concern.

We all continue to be shocked and horrified by the senseless war that the Russian government is inflicting on Ukraine and its people. As we galvanized to find ways in which we can help, our main focus has been helping our Ukrainian colleagues and supporting the humanitarian efforts to aid the people of Ukraine. I am proud of how we have come together across our network to support those in need, donating money, taking colleagues and their families into homes and reaching out with messages of support.

But helping Ukrainian colleagues is just part of our responsibility. Last week we set our position deploring the Russian government’s invasion of Ukraine. Since then we have also been thinking about how we can take action in the way we run our network.

We have decided that, under the circumstances, PwC should not have a member firm in Russia and consequently PwC Russia will leave the Network.

As we implement this, we will maintain our focus on doing all we can to help our Ukrainian colleagues and support the humanitarian efforts to aid the people of Ukraine who have been devastated by this invasion.

We are also committed to working with our colleagues at PwC Russia to undertake an orderly transition for the business and with a focus on the well being of our 3,700 colleagues in PwC Russia.

My thoughts and prayers are with the people of Ukraine.

Bob Moritz, Global Chairman

However, Moritz didn’t address a report by the Financial Times today that PwC Belarus was also exiting PwC’s network of firms. According to FT, PwC’s newly independent Russian and Belarusian operations will be renamed and be free to continue working for local clients as well as serving international companies with operations in those countries.

[Original article posted Sunday afternoon.]

According to multiple reports, PwC is leaving Russia as a result of its invasion of Ukraine—making it the first of the Big 4 to distance itself from its Russian-member firm. PwC is set to make it official on Monday, according to Bloomberg.

The Wall Street Journal reported this afternoon:

“We have decided that, under the circumstances, PwC should not have a member firm in Russia and have agreed with PwC Russia that it will leave the PwC Network,” Bob Moritz, the firm’s global chairman, wrote in an email to staff. “We know this is the right thing to do, but that doesn’t make it easy.”

PwC said it has 3,000 partners and staff in the country, where it has operated for more than 30 years. PwC Russia is locally owned but has participated in the firm’s network, collaborating on client work.

“They did not ask for this senseless war,” Mr. Moritz wrote.

PwC employees were told in the email that all PwC member firms would stop working with any Russian entities or individuals subject to sanctions, according to the WSJ. Both the WSJ and Bloomberg also reported that PwC was committed to the well-being of its 3,700 employees in Russia and would work to ensure a smooth transition for the business.

In addition, according to the Financial Times, PwC is also kicking out of its network a member firm in another country that supports Vlad Putin’s war against Ukraine:

PwC  said its member firm in Belarus would also exit the network.

PwC’s Russian operations will continue to operate as a standalone firm with no official link to the global brand.

Now that PwC is pulling out of Russia, the dominoes will start to fall, and we expect the other Big 4 firms to announce the same this week or shortly thereafter. [KPMG also announced Sunday afternoon that it was severing ties with its member firms in Russia and Belarus.] Before this news broke today about PwC and KPMG, Deloitte had been the only Big 4 firm that said it was “currently reviewing our business and presence in Russia,” hinting last week that it was considering cutting ties with its member firm there.

Last week, Grant Thornton became the first large global accounting firm to leave Russia behind, announcing that its affiliate in Russia, FBK, was leaving the GT network of firms as a result of the invasion of Ukraine. There was also a comment in a post on Fishbowl last week that RSM had pulled out of Russia as well. If you go on RSM Russia’s website, all that’s there currently is an email address for media inquiries. We have reached out to RSM for comment about its operations in Russia but have yet to hear back from the firm.

We’ll update this article as the situation develops.

Related articles:

KPMG Is Pulling the Plug On Its Operations In Russia and Belarus
Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients?
Grant Thornton Drops Its Russian Affiliate Over Conflict In Ukraine
Ex-Big 4 Partner On Why the Big 4 Firms Should Pull Out of Russia: ‘It’s the Right Thing to Do and You Know It’

The post Reports: PwC Is Withdrawing From Russia and Belarus (UPDATE) appeared first on Going Concern.

“We believe we have a responsibility, along with other global businesses, to respond to the Russian government’s ongoing military attack on Ukraine. As a result, our Russia and Belarus firms will leave the KPMG network. KPMG has over 4,500 people in Russia and Belarus, and ending our working relationship with them, many of whom have been a part of KPMG for many decades, is incredibly difficult. This decision is not about them – it is a consequence of the actions of the Russian Government. We are a purpose-led and values-driven organization that believes in doing the right thing. We will seek to do all we can to ensure we provide transitional support for former colleagues impacted by this decision.”

Earlier today several news outlets broke the news that PwC is also cutting ties with its member firms in Russia and Belarus due to the war in Ukraine. PwC Global Chairman Bob Moritz confirmed in a statement late Sunday afternoon that PwC is pulling out of Russia, but he didn’t confirm a report by the Financial Times earlier today that PwC Belarus was also exiting PwC’s network of firms. It’s only a matter of time before Deloitte and EY make similar announcements.

Related articles:

Reports: PwC Is Withdrawing From Russia and Belarus
Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients?
Grant Thornton Drops Its Russian Affiliate Over Conflict In Ukraine
Ex-Big 4 Partner On Why the Big 4 Firms Should Pull Out of Russia: ‘It’s the Right Thing to Do and You Know It’

The post KPMG Is Pulling the Plug On Its Operations In Russia and Belarus appeared first on Going Concern.

Because the first part of the document is a little blurry/difficult to read, I’ve transcribed it below:

Protecting our IT systems

Published: Thursday, 03/03/2022

As the Russia-Ukraine war continues, KPMG is staying vigilant and guarding against cyber threats while continuing to stand with and support the people of Ukraine. To help protect the firm and our clients, we are taking several steps to restrict non-business internet connectivity. These restrictions help reduce the firm’s cyber risk exposure and are not expected or intended to impact business functions.

This includes:

• Restricting access to certain higher-risk websites.
• Restricting emails to or from higher-risk email domains.
• Blocking access to personal email sites (e.g., mail.yahoo.com, gmail.com, etc.) from KPMG laptops.

— This will not impact use of your KPMG.com email address to communicate to individuals with these types of email accounts; it only blocks your ability to access your personal email accounts from your KPMG laptop.
— Personal email accounts can continue to be accessed from smart phones or personal computers.
— Please not that while we are making this change now given the events going on around the world, it is a best practice and a change that will be permanent.

Our tipster from KPMG is not happy about this new policy change. AT. ALL.

I’m absolutely boiling over KPMG’s latest kick in the ass: banning all employees from being able to access our personal emails on a permanent basis. And pretending like this has to do with cyber security and international warfare is gross and transparent. Everyone knows they have been foaming at the mouth like a rapid [I’m pretty sure she meant “rabid”]  dog, waiting to chomp at the first opportunity to do this.

Lucky me – now I get to buy a personal computer in order to deal with my most basic needs – medical forms, Amazon return labels, school forms, personal taxes, etc. Perhaps KPMG’s extremely generous $5,000 senior manager raise that was announced many months ago and garnered tons of press, but of course has not yet gone into effect yet, can cover the cost… after 5+ months. Lmao.

To the many, many partners I know that read this website: f u, f u, f u. Thank you for making it clear who you care least about – those most likely to not have working college computer… experienced workers. And dare I say females, who this policy disproportionately effects because of, well, life? Promise you this: I’ll be gone by the end of the year.

There’s a thread on Fishbowl about the Radio Station’s new personal email policy that has more than a dozen comments: some saying KPMG is ridiculous for doing this, others saying the people at KPMG complaining about this are ridiculous. Feel free to choose a side in the comment section below.

The post One KPMGer Is Livid That She Won’t Be Able to Check Her Personal Email On Her Firm-Issued Laptop Ever Again appeared first on Going Concern.

Three of the Big 4’s biggest consulting rivals—Accenture, McKinsey, and Boston Consulting Group—said yesterday they are severing ties with Russia. The Financial Times reported:

Accenture axed its entire 2,300-person business in Russia on Thursday while McKinsey and Boston Consulting Group moved to suspend all client work there, as the world’s largest professional services groups join western companies’ flight from the country.

Days after Vladimir Putin’s invasion of Ukraine, McKinsey and BCG had said they would not work for Russian government entities but had stopped short of dropping other clients, including state-owned groups.

McKinsey said on Thursday it would immediately cease work for state-owned entities in the country and would suspend all client work there once its other projects ended. The firm has more than 400 consultants in Russia.

BCG, which also employs about 400 people in the country, said on Thursday it was suspending its work with Russian clients but would keep staff based there on. They would be offered the chance to relocate outside Russia or to work on internal projects or for non-Russian clients, said one person briefed on the matter.

Deloitte is so far the only Big 4 firm that is considering pulling out of Russia, saying in a statement on Wednesday the firm “is currently reviewing our business and presence in Russia. We are mindful of our professional obligations and the changing circumstances as we undertake this review. We will continue to comply with all applicable sanctions; Deloitte does not serve any entities of Russia’s Central Government.”

FT reported yesterday that a source said another Big 4 firm “could be ready to announce its exit within days. However, an insider at another firm said it could take them weeks or even months before it could sever its ties to its Russian member firm.” That’s because some Big 4 firms “have encountered contractual and other legal problems that were delaying their ability to remove their Russian member firms from their global alliances,” according to FT.

Grant Thornton became the first large global accounting firm to dump its Russian affiliate after saying on Tuesday that “FBK, the Grant Thornton member firm in Russia, is leaving the network with immediate effect.”

Related articles:

Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients?
Grant Thornton Drops Its Russian Affiliate Over Conflict In Ukraine

The post Ex-Big 4 Partner On Why the Big 4 Firms Should Pull Out of Russia: ‘It’s the Right Thing to Do and You Know It’ appeared first on Going Concern.

After working 12-plus hours a day, the last thing these people want to do is watch some annoying training video on their laptop about cybersecurity, auditor independence, ethics, and/or sexual harassment—and then have to answer questions about what they just watched. One source told us:

Everybody shares answers. To think that no one does is naive. But be smart about sharing your answers. Don’t do electronic sharing. We pass around the answers the old-fashioned way—on paper, like on a Post-It note—and then shred the paper. We work long hours and are expected to take the same training tests every year. We’re overworked and underpaid, and we don’t have time for that.

It ain’t cheating if you don’t get caught, right? Well, more Big 4 firms are getting caught—and fined by regulators. And the fines would be much harsher if these firms hadn’t self-reported the internal training cheating to regulators. The PCAOB fined KPMG Australia $450,000 on Sept. 14, 2021, for training-related misconduct that occurred from 2016 until early 2020 and involved more than 1,100 KPMG partners and staff, including more than 250 of its auditors. These KPMGers took part in an answer-sharing scheme—either by providing or receiving answers—on mandatory training courses covering topics that included independence, auditing, and accounting.

We have also heard rumors that EY in the US fired a bunch of people, including partners, a couple years ago for cheating on internal training courses. Here’s a tip we got in September 2020 regarding the cheating at EY:

The firm has launched an investigation reviewing employees’ emails as far back as 2015 to identify people who have either sent or received (and not reported) answers for internal web based learnings. The process has lacked transparency and punishments have been subjective ranging from one time fines ($500), salary reduction or termination. One SM posted in the EY Fishbowl that s/he was able to argue for one of their team members to not get fired. Timing seems convenient given Covid.

The firm is taking 3-6 months to hand out punishments from the time of initial contact with employees identified through the email search. They are instructing employees to not discuss with anyone and sign NDAs, completely isolating the employees and leaving them in an anxious state of waiting. This is widespread, with the greatest impact on the audit practice. The firm is unaware that staff and seniors continue to share answers but are doing so via personal email to avoid detection. This has impacted managers and SMs the most so far as it relates to all the way back in 2015. The firm is refusing to acknowledge the collaborative culture beginning in audit 101 trainings where the facilitators share answers for the training assessment and encourage staff to work with each other to pass the assessment. This is a culture problem that needs to be addresses at the source rather than using it as another way to reduce headcount.

EY hasn’t been punished by regulators for the alleged internal training cheating our tipster mentioned above. But a Big 4 firm that was recently punished for test cheating is PwC Canada, which was fined $750,000 by the PCAOB on Feb. 24 and $200,000 by the Canadian Public Accountability Board on Feb. 25. According to the PCAOB, from 2016 to early 2020, more than 1,200 PwCers were involved in improper answer sharing—either by providing or receiving answers—in connection with online tests for mandatory internal training courses covering topics that included auditing, accounting, and professional independence. And at least 1,100 of these employees were from PwC Canada’s assurance practice.

The PCAOB disciplinary order goes on to say:

From at least 2016 to early 2020, more than 1,200 PwC Canada personnel were involved in improper answer sharing related to training tests. Firm personnel primarily shared answers through use of several shared drives that professionals had created on the Firm’s computer network (the “Shared Drives”), and on which professionals had posted the answers for others to view and provide supplemental answers. In addition, individuals shared answers by sending emails with attached documents containing answers to training test questions, by providing answers in hard copy documents, or by discussing answers when taking tests in the presence of others.

Instances of improper answer sharing primarily occurred in connection with tests that were a part of the Firm’s mandatory Assurance training. The Shared Drives contained answers for at least 46 of the Firm’s approximately 55 mandatory Assurance tests, as well as answers for some mandatory Firm-wide tests containing content concerning professional integrity and professional independence.

Improper sharing of training test answers occurred among junior staff, managers, directors, and partners at the Firm. After Firm leadership learned of the practice, it conducted an internal investigation. The Firm’s investigation revealed that the misconduct was widespread within the Firm’s audit practice, including among those who performed work on audits governed by PCAOB standards. At least 1,100 professionals in the Firm’s Assurance practice were involved in answer sharing.

As illustrated by the misconduct described above, from 2016 to early 2020, PwC Canada failed to establish policies and procedures, including monitoring procedures, to provide the Firm with reasonable assurance that (1) Firm personnel performed all professional responsibilities with integrity; (2) personnel to whom work was assigned had the degree of technical training and proficiency required in the circumstances; and (3) personnel participated in general and industry-specific continuing professional education that enabled them to fulfill responsibilities assigned and satisfy applicable continuing professional education requirements of regulatory agencies. Accordingly, the Firm violated PCAOB quality control policies related to integrity and personnel management.

The PCAOB noted that the fine would have been much higher had there not been “extraordinary cooperation in this matter” from PwC Canada:

The Firm voluntarily self-reported the matter to PCAOB staff after learning about the misconduct. Additionally, the Firm promptly instituted remedial measures, including conducting periodic searches across certain Firm systems to identify improper answer sharing, and requiring personnel to re-take certain training and testing. Absent the Firm’s extraordinary cooperation, the civil money penalty imposed would have been significantly larger, and the Board may have imposed additional sanctions.

In an unprecedented move, PwC Canada released a statement from CEO Nicholas Marcoux regarding the test cheating—and posted it on its website! Usually us reporters have to beg and grovel (and oftentimes get ignored) for some kind of decent response from the firm’s PR machine regarding an incident like this. Marcoux said:

At PwC Canada we are committed to serving our stakeholders to the best of our ability and in accordance with our values and purpose – to build trust in society and solve important problems. When we do not meet the standards we set for ourselves, we acknowledge it and take action to do better.

To help ensure we have the best people delivering the highest quality work to our clients, we invest in their professional development and rigorous training that exceeds the requirements of our profession.

In early 2020, it came to our attention that some of our people, primarily junior-level Assurance employees, shared online documents containing answers to some internal assessments as part of this additional training. Taking this seriously, PwC Canada immediately opened an extensive investigation with the assistance of external resources and voluntarily disclosed this matter to the regulators.

We have since undertaken several remediation steps including retraining, additional ethics training, financial penalties, written warnings and terminations where warranted.

PwC Canada and each of CPAB and PCAOB have reached settlements with respect to this matter. CPAB has released a public order which imposes sanctions on the firm including costs in the amount of $200,000. PCAOB has also released a public order which imposes sanctions on the firm including a financial penalty in the amount of US$750,000. Both CPAB and PCAOB credit PwC Canada for extraordinary cooperation.

While we are confident there has been no impact or compromise to the quality of our audits as evidenced by our current inspection results, we expect more from everybody in our firm. All of us must consistently live our values and purpose for PwC Canada to be recognized as having the best people in professional services delivering the highest quality work.

We value the trust that our clients and community put in us, and we remain committed to ensuring that we continue to earn this trust every single day.

Because “trust” is a big deal at PwC. PwC is a name you can “trust.” If you don’t believe them, they’ll tell you that a couple dozen times in a conversation. But we don’t trust that cheating on internal training exams will never happen again at a PwC firm.

Related articles:

SEC Says $50 Million Fine For KPMG Is ‘Significant’ and ‘Appropriate’ For All That Cheating Going On
KPMG Australia Audit Partners and Staff Didn’t Get Away with Cheating on Internal Training Exams Either

The post PwC Canada Is the Latest Big 4 Firm to Get Busted By Regulators For Employees Cheating on Internal Training Courses appeared first on Going Concern.

When Deloitte’s global HQ posted a statement on its website on March 1 (see below in original post from Tuesday), the firm said it had “suspended business operations and client service in Ukraine as we focus on taking care of our people and their loved ones.” But on Wednesday, Deloitte Global updated its statement to say it “is currently reviewing our business and presence in Russia,” making it the first Big 4 firm to say publicly that it’s at least considering pulling out of Russia. But doing so is easier said than done, according to a Wall Street Journal article on March 1. Jean Eaglesham wrote:

One difficulty for the Big Four firms, according to people familiar with the matter, is that the Russian members of their networks are separate legal entities, answerable to local regulators.

The Big Four networks’s governing rules allow firms to be expelled only on specific grounds, such as gross misconduct. Booting a member firm because of the actions of its country’s government would be a complicated, drawn-out process, the people said.

The Big Four are also concerned about potential retaliation against staff in Russia if they ax clients there, the people familiar with the matter said.

Grant Thornton became the first top global accounting firm to boot its affiliate in Russia, FBK, out of its network of firms as a result of the invasion of Ukraine.

Here is the updated statement from Deloitte. We have bolded the new portion of the statement that was added by the firm yesterday:

Deloitte stands unequivocally with the people of Ukraine. Russia’s invasion of this sovereign nation is an indefensible act of aggression that echoes the darkest days in European history. Our overriding concern at this time is the well-being of our colleagues in Ukraine and their families. We are taking every possible action to ensure their safety and that their essential needs are being met under fast changing circumstances. We are concerned about all of our colleagues affected by this ongoing crisis.

For the time being, Deloitte has suspended business operations and client service in Ukraine as we focus on taking care of our people and their loved ones.

Deloitte is currently reviewing our business and presence in Russia. We are mindful of our professional obligations and the changing circumstances as we undertake this review. We will continue to comply with all applicable sanctions; Deloitte does not serve any entities of Russia’s Central Government.

Our primary focus will continue to be for the safety and well-being of our people as well as bringing to bear our global resources to address the humanitarian needs across Europe.

Our hope is that peace will prevail quickly.

[Original article posted on March 1.]

While all the Big 4 firms and some of their leaders throughout the world have pledged their support for Ukraine and denounced Russia’s invasion and assault of its neighbor, they’ve kept quiet on whether they’ll end any client relationships in Putinville.

Deloitte, PwC, EY, and KPMG have offices in both Russia and Ukraine. The Big 4 can release statements and make posts on social media about how they “stand with Ukraine,” but will they, as billion-dollar global brands, just walk away from certain clients in Russia? Like Delonte “Ghost” Rivers said in the movie Takers: “Aye, business is business. And money is money. I never said we were friends.”

The silence from three-fourths of the global CEOs of the Big 4 firms (Punit Renjen of Deloitte [Renjen has since tweeted about it], Bob Moritz of PwC, and Bill Thomas of KPMG) on Russia’s invasion of Ukraine speaks volumes. The only one who has publicly said anything about it is Carmine Di Sibio of EY:

At EY, we are continuously monitoring the conflict in Ukraine to ensure all EY people and their families are safe. We stand by our colleagues and support the global call for peace. https://t.co/sKWWYOI8xx

— Carmine Di Sibio (@Carmine_DiSibio) February 28, 2022

But the leaders of some of the Big 4’s global competitors in the consulting world have actually come out and said they no longer will serve any government entity or do any new government work in Russia.

As Bloomberg noted today, sanctions imposed by the US, UK, and European Union in response to Russia’s invasion of Ukraine are forcing professional services firms globally to consider whether they should continue working with Russian clients who are state-owned. Several law firms said they are reviewing and, in some cases, planning to cut ties with major Russian clients as pressure mounts to comply with sanctions. [See this Above the Law article.]

So far that we’ve seen, Jon Holt, CEO of KPMG UK, is the only leader of a Big 4 firm who said publicly there will be client relationships that will be ending due to the situation in Ukraine, although he didn’t mention Russia by name. Holt wrote in a post on LinkedIn: “We are reviewing and adapting our client work and operations to align with sanctions and comply with all new laws. This will mean ending some of our client relationships in the UK and globally. The situation is fast-moving and is being kept under close review on a daily basis.”

In regards to the firm’s employees in Ukraine, Holt wrote: “First and foremost, we’re focused on the health and safety of our people and their families. KPMG is a global firm with offices in Kyiv and across the region. We’re in constant dialogue with our local colleagues to support them through this period, and our member firms are working to ensure they are able to provide all necessary support and assistance to them.”

In a statement on Twitter, KPMG’s global HQ didn’t say anything about potentially severing ties with clients in Russia: “KPMG around the world is also fully adhering to the sanctions introduced by various governments, which hopefully will contribute to bringing an end to this crisis.”

KPMG colleagues and firms across the world are united in our support for the people of Ukraine and all of those across the region who have been affected by this senseless military action. (2/4)

— KPMG (@KPMG) March 1, 2022

KPMG around the world is also fully adhering to the sanctions introduced by various governments, which hopefully will contribute to bringing an end to this crisis. (4/4)

— KPMG (@KPMG) March 1, 2022

PwC’s official statement only addresses its support for the firm’s colleagues in Ukraine:

We have all been shocked by the war raging in Ukraine. Across the PwC network, we have come together to offer support.

A huge thanks to all of our colleagues, particularly those in the neighbouring countries to Ukraine, for their help. #StandWithUkraine pic.twitter.com/SlwmRq7vB7

— PwC (@PwC) February 28, 2022

Deloitte has been very quiet regarding Russia’s invasion of Ukraine; the firm hasn’t released an official statement about what Russia is doing. [UPDATE] This afternoon Deloitte released a statement on the situation in Ukraine, saying the firm “has [temporarily] suspended business operations and client service in Ukraine as we focus on taking care of our people and their loved ones.” Deloitte’s full statement says:

Deloitte stands unequivocally with the people of Ukraine. Russia’s invasion of this sovereign nation is an indefensible act of aggression that echoes the darkest days in European history. Our overriding concern at this time is the wellbeing of our colleagues in Ukraine and their families. We are taking every possible action to ensure their safety and that their essential needs are being met under fast changing circumstances. We are equally concerned about our colleagues in Russia and adjoining countries affected by this crisis. We are bringing to bear our global resources to address the humanitarian needs unfolding across Europe.

For the time being, Deloitte has suspended business operations and client service in Ukraine as we focus on taking care of our people and their loved ones.

Deloitte firms will continue to comply with all applicable sanctions.

Our hope is that peace will prevail quickly.

Before Deloitte Global released its statement this afternoon, Richard Houston, CEO of Deloitte UK, took to LinkedIn to address his firm’s stance on the invasion. He wrote: “Deloitte North & South Europe is united with our Global Network in providing support to our colleagues and their families in the region, alongside helping wider humanitarian efforts. We unequivocally deplore Russia’s military invasion of the country and its absolute disregard for Ukraine’s sovereignty and independence.”

And it’s been interesting reading the comments below Houston’s post. In summary, many of his followers/connections on LinkedIn said social media posts of Ukraine support are nice and all, but Deloitte should no longer do business in Russia. Actions speak louder than words.

As of this morning, EY was the only Big 4 firm to actually post a statement regarding the crisis in Ukraine on its global website. But like the others, EY sidestepped the issue about the future of its Russia-related work: “As a global organization, we are working with relevant governments to comply with the recently enacted country policies and applicable sanctions.” EY’s full statement says:

We denounce the war in Ukraine and condemn the violation of international law. We are deeply concerned by the humanitarian catastrophe unfolding in Ukraine. The Russian military invasion in Ukraine is in direct opposition to the values that are core to our organization. It has, and will continue to cause, a great deal of suffering across Ukraine, Eastern Europe, Russia, and elsewhere. We urge all parties to work towards a peaceful resolution.

From the outset of this crisis, we have been primarily focused on the safety of EY people in Ukraine and colleagues outside of Ukraine who have family and friends in the midst of this ongoing military conflict. We have been determined to bring the full support an organization such as ours can bring – to help those who want to leave, as well as those who have had to, or have chosen to, stay. We have been deeply moved by the outpouring of support across our organization for those suffering as a result of this war. Our EY family is pulling together in ways both large and small to support those impacted. As a global organization, we are working with relevant governments to comply with the recently enacted country policies and applicable sanctions.

We’ll update this article if any new information appears regarding the Big 4’s future (and future client work) in Russia.

The post Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients? (UPDATE) appeared first on Going Concern.

In light of the conflict in Ukraine, FBK, the Grant Thornton member firm in Russia, is leaving the network with immediate effect. Like many international organisations around the world, we will continue to evaluate what further actions are needed as the situation evolves.

We are shocked and saddened by the events in Ukraine and our focus at Grant Thornton continues to be on supporting our colleagues at this very difficult time. Grant Thornton Ukraine is receiving offers of support from Grant Thornton firms around the world and our thoughts remain with our colleagues and their families in Ukraine at this distressing time.

Grant Thornton International has already removed Russia from its list of global locations. The FBK website says the Moscow-based firm is one of the top 10 largest audit firms in Russia and claims that 24 out of the 50 biggest companies in Russia are FBK clients. The Financial Times and City A.M. both reported that Russian state oil company Gazprom is one of FBK’s audit clients. City A.M. also noted that FBK has carried out work on behalf of Russia’s Central Bank.

FBK currently has 21 partners and 486 staff and is led by managing partner Sergey Shapiguzov. Founded in 1990, FBK was formerly a member of the PKF International network of firms. It joined Grant Thornton International in 2014.

Related article:

Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients?

The post Grant Thornton Drops Its Russian Affiliate Over Conflict In Ukraine appeared first on Going Concern.

Brain Booster Pancake Recipe

Ingredients

• 1 1/4 cup almond milk, unsweetened
• 1 3/4 cup oats, dry
• 1/4 cup flaxseed, ground
• 1 medium banana
• 1 tablespoon honey
• 1 teaspoon vanilla extract
• 1/2 teaspoon cinnamon
• 1/4 teaspoon sea salt
• 1 1/2 teaspoon baking powder
• 2 large eggs
• 1 tablespoon coconut oil
• 1 cup blueberries

(Recipe courtesy of Super Healthy Kids.)

Women At Ernst & Young Instructed On How To Dress, Act Nicely Around Men [Huffington Post]

Related article:

EY Thinks Women Are a Bunch of Dumb Sluts: Report

The post One Big 4 Firm Wishes All the Ladies a Happy National Pancake Day appeared first on Going Concern.

According to a Feb. 22 report by the New York Times, Liz and Rep. Pramila Jayapal (D-WA) are asking the US Treasury Department to investigate the cozy relationship Treasury has had with the Big 4 and RSM US through the years, after a Times investigation last fall detailed several instances of how these firms allow some of their top tax lawyers to be poached by the government, mostly in the Treasury’s tax policy office, so they can help write tax rules that benefit their clients. Then they end up returning to their old firm, oftentimes rewarded with a promotion to partner.

The NYT noted that this back and fourth between Big 4 tax lawyers and the Treasury Department went on (at least) during the presidencies of Donald Trump, Barack Obama, George W. Bush, and Bill Clinton.

The two lawmakers sent letters to each of the Big 4 firms and RSM (see below this update for the letter sent to Deloitte) warning them that they’ve introduced the AntiCorruption and Public Integrity Act (S. 5070) that would end “these corrupt schemes.” Warren and Jayapal also asked the firms a series of questions about their participation “in the corrupt revolving door scheme detailed by the New York Times.”

According to the Times article on Feb. 22, Warren and Jayapal saw enough in the responses to their questions by the firms to ask the Treasury Department in a letter to look into this post haste:

“Following our own investigation that has corroborated these allegations and raised new concerns about the accounting giants that take advantage of these revolving-door schemes, we urge you to immediately open an inquiry into this matter,” the two lawmakers wrote in their letter. It was sent to the Treasury Department’s acting inspector general, Richard K. Delmar, and its inspector general for tax administration, J. Russell George.

“Accounting giants are abusing the public trust and taking advantage of the revolving door between public service and private profit,” the lawmakers said in the letter.

[…]

“But these disclosures only reveal the tip of the iceberg,” the lawmakers wrote. “Neither the firms nor the Treasury Department provided meaningful information about their employees’ responsibilities and clients, either at the firms or while in government.”

While Deloitte and PwC ignored the question of, “Since January 1, 2001, how many lawyers or other employees [of your firm] have taken tax policy positions in the Treasury Department, the IRS, or elsewhere in the federal government and returned [to your firm] after their government service?” citing confidentiality and employee privacy issues or that “we do not track this information,” EY provided Warren and Jayapal with the following:

After a review of our records, we have identified seven persons who left EY in the past 10 years, took what we believe can be considered a tax policy role at Treasury or the IRS, and then returned to EY. Of the seven people, some returned at the same rank as the rank at which they left our firm, while some returned at a higher rank. Additionally, we estimate that, on average, there were 5.5 years between when those persons left our firm and when they rejoined. This significant average tenure is consistent with the spirit of public service we observe in our people who look to take their expertise to the government.

KPMG said in its response to the lawmakers’ questions:

Over the twenty-year period from January 1, 2001 to date, KPMG has had five senior tax professionals who left the Firm to serve at either the Department of the Treasury or the Internal Revenue Service and who then returned to KPMG.

In a follow-up letter to Warren and Jayapal, KPMG found one other instance of a senior tax professional who had left the firm to work at the IRS and then returned to KPMG.

RSM said in its letter to Warren and Jayapal that an internal investigation found only one person who met their criteria since the firm’s Washington National Tax practice opened in 2010.

All told, Warren and Jayapal told the Treasury Department in their letter that “since January 1, 2001, at least 24 employees left their companies to take tax-policy positions in the federal government and returned to the companies afterward, with many receiving promotions, raises, or both upon their return.”

You can read Warren and Jayapal’s letter to the Treasury Department here. You can read the five accounting firms’ responses here.

[Article originally posted on Oct. 8, 2021.]

Uh-oh, the Big 4 firms have gotten Sen. Elizabeth Warren’s dander up.

The Massachusetts Democrat was appalled at a recent New York Times report that found at least 35 examples of big public accounting firm tax lawyers who left to join the US Treasury’s tax policy office or other government positions and then were rehired by their old firm. In nearly half of those cases, the employees were promoted to partner upon their return—often doubling their pay.

What drew Warren’s ire was how these ex-PA tax lawyers were able to approve generous tax loopholes that were often used by their former firms, give tax breaks to former clients, and roll back efforts to rein in tax shelters while working inside the US government, according to the report. The NYT wrote:

The largest U.S. accounting firms have perfected a remarkably effective behind-the-scenes system to promote their interests in Washington. Their tax lawyers take senior jobs at the Treasury Department, where they write policies that are frequently favorable to their former corporate clients, often with the expectation that they will soon return to their old employers. The firms welcome them back with loftier titles and higher pay, according to public records reviewed by The New York Times and interviews with current and former government and industry officials. …

After lobbying by PwC, a former PwC partner in the Trump Treasury Department helped write regulations that allowed large multinational companies to avoid tens of billions of dollars in taxes; he then returned to PwC. A senior executive at another major accounting firm, RSM, took a top job at Treasury, where his office expanded a tax break in ways sought by RSM; he then returned to the firm.

The thing is, this has been going on at the Big 4 for a long time. A Redditor commented about the NYT article: “And in other news, water is wet.” But now, thanks to the Times, this gaming of the system is now out in the open.

Apparently Warren couldn’t believe how sneaky and shady the Big 4 (and RSM) really are, so she and House Rep. Pramila Jayapa (D-WA) decided that sending letters to the CEOs of Deloitte, PwC, EY, KPMG, and RSM tsk-tsking them over this scheme will get them to stop. But if that doesn’t work, Warren and Jayapa threatened to stop it via an ethics bill they introduced in Congress in both 2018 and 2020.

The letter states: “Americans are sick and tired of these corrupt schemes, and we’ve introduced the AntiCorruption and Public Integrity Act (S. 5070) that would end them. The decades-long scam in which large accounting firms have abused the revolving door between the government and the private sector to help their wealthy clients avoid paying their fair share of taxes demonstrates precisely why this legislation is necessary.”

Here is the full text of one of the letters Warren and Jayapa sent to the five accounting firms. This is the one Deloitte CEO Joe Ucuzoglu received:

Joe Ucuzoglu
Chief Executive Officer
Deloitte US
30 Rockefeller Plaza
New York, NY 10112

Dear Mr. Ucuzoglu:

We write regarding a disturbing new report that reveals the corrupt revolving door between the world’s largest accounting firms and the federal government—and the extent to which this “remarkably effective behind-the-scenes system” “help[s] the world’s biggest companies avoid taxes.” On September 19, 2021, the New York Times exposed how large accounting firms—including Deloitte—send their lawyers into high-ranking positions in the federal government to create new tax loopholes for their clients, and then reward the same lawyers with bigger paychecks and promotions upon their return. We are seeking information to understand the extent to which Deloitte has been involved in these unethical schemes.

Accounting giants are abusing the public trust and taking advantage of the revolving door between public service and private profit. The Times report uncovers that, in the last four presidential administrations, dozens of lawyers have left the top accounting firms for tax-policy positions in the Treasury Department and the Internal Revenue Service—where they have rewritten America’s tax laws for the benefit of their former clients. Once they return after their stints in government to work for those same clients, they receive promotions and massive salary increases in exchange for their “public service.”

In one instance, Deloitte and PricewaterhouseCoopers designed a lucrative new tax shelter for multinational corporations, which was placed at risk when the Treasury Department issued a warning notice to shut down the scheme. But several years later, a former Deloitte attorney entered the Treasury Department, and his office issued new regulations to ease the path for companies shifting their profits offshore to avoid U.S. taxes. The attorney soon returned to Deloitte and was immediately promoted to partner.

Americans are sick and tired of these corrupt schemes, and we’ve introduced the AntiCorruption and Public Integrity Act (S. 5070) that would end them. The decades-long scam in which large accounting firms have abused the revolving door between the government and the private sector to help their wealthy clients avoid paying their fair share of taxes demonstrates precisely why this legislation is necessary. Under our bill:

• Executive branch employees would be required to recuse themselves from matters that might financially benefit their immediately prior employers or clients
• Private-sector companies would be restricted from immediately hiring or paying any senior government official that was recently lobbied by the company
• The world’s largest corporations, banks, and monopolies would be restricted from immediately hiring or paying any senior government official after they leave government service
• Private-sector companies would be banned from providing “golden parachutes” to compensate executives for entering into federal service
• Lobbyists would be required to disclose any specific government actions that they attempted to influence, any meetings conducted with public officials, and any documents provided to those government officials
• A new U.S. Office of Public Integrity would be created to enforce federal ethics and anticorruption laws

Our legislation would close the revolving door between massive accounting firms like yours and the federal government, ensuring that our government officials work for the people and not the wealthiest corporations and their clients. And Sen. Warren’s Real Corporate Profits Tax, which would simplify the tax system and make it harder for giant corporations to create and profit from tax loopholes, would reduce the payoff from these unethical practices and the incentives to engage in them.

To better understand Deloitte’s participation in the corrupt revolving door scheme detailed by the New York Times, we ask that you answer the following questions by October 19, 2021:

1. Since January 1, 2001, how many lawyers or other Deloitte employees have taken tax policy positions in the Treasury Department, the IRS, or elsewhere in the federal government and returned to Deloitte after their government service?

2. For each of these employees, please provide the following information:

a. When they left Deloitte, and when they returned.
b. What position(s) they served in at Deloitte, before and after their government service, and what their specific responsibilities were in those positions.
c. What position(s) they served in in the federal government, and what their specific responsibilities were in those positions, including any regulatory or legislative matters they worked on that affected Deloitte clients.
d. Who their clients at Deloitte were, before and after their government service.
e. Their compensation at Deloitte, before and after their government service, and any bonuses or other compensation they received in relation to their government service.

3. What are Deloitte’s policies to guard against conflicts of interest for employees who formerly worked for the federal government? Specifically, are Deloitte employees allowed to retain clients if they worked on matters related to these clients while serving in the federal government?

Thank you for your attention to this matter.

Sincerely,

Elizabeth Warren
United States Senator

Pramila Jayapa
Member of Congress

Warren and Jayapa can send all the letters they want to the Big 4, but the fact is nothing is gonna change. Their ethics bill probably won’t get the support it needs in Congress (it hasn’t even left the Senate Finance Committee) before the 2022 election to be enacted into law— and it definitely won’t if the Dems lose control of either the House and/or the Senate next year. And there’s no way the Big 4 and RSM and whatever other firms are doing this (probably BDO and Grant Thornton too) will stop gaming the system if it benefits them and their clients.

But good effort, tho, Liz and Pramila.

How Accounting Giants Craft Favorable Tax Rules From Inside Government [New York Times]

The post Elizabeth Warren Shocked to Learn Big Public Accounting Firms Do Shady Sh*t (UPDATE) appeared first on Going Concern.

Seniors and managers in Deloitte Tax are eligible for a $20k retention bonus. They would have to pay it back if they leave before 2 years. Payouts will be in April.

That same retention strategy was used last October across the hallway in Deloitte’s audit practice, where second-years through senior managers at Deloitte & Touche were offered a one-time retention bonus, with the amounts varying by level (either $20,000 or $35,000). Those who took the retention bonus now must remain at Deloitte through the end of May 2023. If D&Ters leave the firm before then, they have to pay the bonus back in full. The bonus was paid out on Jan. 7.

According to the mid-year compensation adjustment thread on r/accounting, two second-years in audit who shared their mid-year pay bump said they took the extra 20 grand to stick around a couple more years, and five audit seniors posted that they took the $35,000 retention bonus.

Like their cronies in D&T, seniors and managers in Deloitte Tax having to make a deal with the green devil for the next two years to get an extra $20,000 has to be a tough decision, especially now in this hot job market. But who couldn’t use an extra $20,000 these days?

Related articles:

Bonus Watch ’21: Deloitte’s Audit Practice Is Trying to Nip This ‘Great Resignation’ Thing In the Bud By Offering Retention Bonuses
Compensation Watch ’21: Deloitte Puts Mid-Year Raises On the Table

The post Bonus Watch ’22: Deloitte Tax Tries to Lock In Seniors and Managers For Two More Years By Dangling Retention Bonus appeared first on Going Concern.

But I remember seeing on my Twitter feed later that night people talking about the huge mistake made during the Oscars’s Best Picture award—La La Land was mistakenly announced as the winner when the Oscar should have gone to Moonlight. The mistake was corrected but what an embarrassing moment for all involved. Then people on Twitter started pointing fingers at PricewaterhouseCoopers, the accounting firm that has overseen the counting of the Oscars ballots for 83 years, for giving the Best Picture award presenters, Faye Dunaway and Warren Beatty, the wrong envelope.

I was working for AccountingWEB at the time, and I had seen before on Going Concern (AWEB and GC used to be sister sites) articles about PwC being the outfit that tabulated votes for the Oscars. Ooops. Sucks for PwC, but at that time I really didn’t care much about what had happened. AWEB didn’t really cover accounting news (or news of Big 4 firms screwing up major TV award shows) that much, so I knew I wouldn’t have to write anything about the mess PwC caused.

But over at Going Concern, Caleb and Adrienne had a field day in the aftermath of the PwC Oscars debacle. ICYMI at the time, here’s just some of the coverage Going Concern gave #envelopegate in the days, weeks, months, and even a year after it happened:

• And the Award For Worst Oscars Gaffe Goes To… PwC (Feb. 27, 2017)
• Here Are Some of the Best Tweets Roasting PwC for #EnvelopeGate (Feb. 27, 2017)
• PwC’s Recruiting Will Take a Hit Over the Oscars Debacle (March 1, 2017)
• PwC Keeps the Oscars Gig (March 29, 2017)
• Talking About Race, Mega Lawsuits, That Oscars Screw-up and More: A Conversation With PwC’s Tim Ryan (June 27, 2017)
• PwC Not Talking Up Its Role in the Academy Awards This Year, Obviously (Feb. 1, 2018)
• #Envelopegate Redux: PwC Failed to Predict the Worst-Case Scenario (March 1, 2018)

Greg Kyte even drew a cartoon mocking PwC and now ex-partner and “ballot leader” Brian Cullinan, whose head you can see the back of just right of center in the gif above as he’s panic peeing in his tux on stage. Behind him is fellow PwC partner and ballot counter Martha Ruiz (you can see a flash of the red dress she wore that night and the top of her head in the gif).

But despite being the butt of A LOT of jokes after the incident happened, five years later PwC is still counting Oscars ballots, making money hand over fist, brainwashing recruiting gullible accounting students to come work for them, and is considered by many as the most prestigious of the Big 4. And Tim Ryan survived that whole mess and is still sitting on the chairman’s throne. In short, everything is fine at PwC.

Those of you who worked at PwC five years ago, were you watching the Oscars that night? If you weren’t, how did you find out about the colossal screw-up? What were you thinking at that time? Feel free to flood the comment section with your remembrances of that night or get in touch with us using the contact info below.

The post Happy Fifth Anniversary of PwC F*cking Up the Oscars appeared first on Going Concern.

For the seventh year in a row, Vault has listed Deloitte Consulting as the fourth most prestigious consulting firm in the country, finishing only behind MBB (McKinsey, Boston Consulting Group, and Bain). Vault bases its prestige ranking on the results of a survey, which asks consultants to rate firms with which they are familiar on a scale of 1 to 10, with 10 being the most prestigious. Survey participants weren’t allowed to rate their own (or former) employer.

Unlike the best consulting firms to work for ranking, there’s a lot of Big 4 in the top 10, so everyone’s happy:

1. McKinsey & Co.
2. Boston Consulting Group
3. Bain & Co.
4. Deloitte Consulting
5. PwC Advisory/Strategy&
6. EY-Parthenon
7. Accenture
8. Booz Allen Hamilton
9. EY (Consulting Practice) NA
10. Oliver Wyman

PwC remains in fifth place in 2022, but EY-Parthenon—the best Big 4 consulting practice to work for according to Vault—jumped from 10th last year to sixth this year. EY’s North America consulting practice dropped from sixth last year to ninth this year. Outside of the top 10, KPMG fell one spot from 11th in 2021 to 12th in 2022. And Grant Thornton’s consulting practice made the list again this year, coming in at No. 23.

Vault also ranks consulting firms by practice area, and they include a lot of familiar names. BDO even snuck into one of them:

Data analytics

5. Deloitte Consulting
8. PwC Advisory/Strategy&
9. EY Consulting
13. KPMG Advisory

Defense

11. Deloitte Consulting
16. KPMG Advisory

Economic

8. Deloitte Consulting
9. EY Consulting
10. PwC Advisory/Strategy&
11. KPMG Advisory

Energy

4. Deloitte Consulting
6. PwC Advisory/Strategy&
7. EY Consulting
10. KPMG Advisory

Environmental sustainability

4. Deloitte Consulting
6. PwC Advisory/Strategy&
7. EY Consulting
8. KPMG Advisory

Financial

1. Deloitte Consulting
2. EY Consulting
5. PwC Advisory/Strategy&
7. KPMG Advisory
12. Grant Thornton
19. BDO USA Advisory

Health care

7. Deloitte Consulting
11. PwC Advisory/Strategy&
14. EY Consulting
17. KPMG Advisory

Human resources

1. Deloitte Consulting
10. PwC Advisory/Strategy&
12. EY Consulting
13. KPMG Advisory

IT operations

3. Deloitte Consulting
5. PwC Advisory/Strategy&
12. KPMG Advisory

IT strategy

3. Deloitte Consulting
7. PwC Advisory/Strategy&
14. KPMG Advisory

Management

4. Deloitte Consulting
6. PwC Advisory/Strategy&
7. EY Consulting
9. KPMG Advisory

Operations

3. Deloitte Consulting
6. PwC Advisory/Strategy&
8. EY Consulting
9. KPMG Advisory

Pricing, sales and marketing

5. Deloitte Consulting
7. PwC Advisory/Strategy&
9. EY Consulting
11. KPMG Advisory

Public sector

1. Deloitte Consulting
7. PwC Advisory/Strategy&
8. EY Consulting
11. KPMG Advisory
16. EY-Parthenon

Retail

4. Deloitte Consulting
6. PwC Advisory/Strategy&
8. EY Consulting
9. KPMG Advisory
15. EY-Parthenon

Strategy

4. Deloitte Consulting
6. PwC Advisory/Strategy&
9. EY Consulting
9. KPMG Advisory

Technology, media, and telecommunications

5. Deloitte Consulting
7. PwC Advisory/Strategy&
8. EY Consulting
10. KPMG Advisory

Related article:

Vault 50: Only One Big 4 Firm’s Consulting Arm Made the Top 10 (2022)

The post Vault 50: Deloitte Consulting Still Has the Prestige Factor Going For Them (2022) appeared first on Going Concern.

In 2019, 2020, and 2021, Vault included Deloitte Consulting, EY-Parthenon, and PwC Advisory Services in the top 10 based on a weighted formula Vault uses to compile its annual ranking:

• 30% prestige
• 15% firm culture
• 15% satisfaction
• 10% compensation
• 10% work/life balance
• 10% level of challenge
• 5% overall business outlook
• 5% promotion policies

But in 2022, only one of those three made the top 10. Among the other two, one is on the outside looking in and the other didn’t even make the top 50. Here are the top 10 consulting firms for 2022:

1. Bain & Co.
2. McKinsey & Co.
3. Boston Consulting Group
4. The Bridgespan Group
5. EY-Parthenon
6. Booz Allen Hamilton
7. Oliver Wyman
8. Kearney
9. L.E.K. Consulting
10. Putnam

For the second-straight year, EY-P has come in at No. 5, which is the highest among the Big 4 firms’ consulting practices. Deloitte Consulting—which is shelling out nearly $5 million to settle lawsuits for building leaky state unemployment websites in Colorado, Illinois, and Ohio—dropped from fourth in 2019 and 2020 (tops among the Big 4) to eighth in 2021 and to 11th in 2022. KPMG sits 20th in 2022 after finishing 16th in 2021, 14th in 2020, and 12th in 2019. Then there’s PwC Advisory Services and Strategy&, which dropped out of the top 50 altogether.

We’ll take a look tomorrow at how the Big 4 did in Vault’s 2022 ranking of the most prestigious consulting firms. Until then, have fun ridiculing this awful song about EY from 2016:

The post Vault 50: Only One Big 4 Firm’s Consulting Arm Made the Top 10 (2022) appeared first on Going Concern.

KPMG has had Mickelson’s back even when he was accused of being involved in an insider trading scheme, complained about having rich man tax problems, and fell short all those times at winning the US Open. But KPMG drew the line today after it was reported earlier this month that Phil would support and play in a proposed new Saudi Golf League, which would rival the PGA Tour and be ruled by former world No. 1 ranked golfer Greg Norman, even if the Saudis are “scary motherfuckers to get involved with.” In a soon-to-be-released unauthorized biography of Lefty written by Alan Shipnuck, Mickelson said (a blue KPMG hat tip to The Fire Pit Collective):

We know they killed [Washington Post reporter and US resident Jamal] Khashoggi and have a horrible record on human rights. They execute people over there for being gay. Knowing all of this, why would I even consider it? Because this is a once-in-a-lifetime opportunity to reshape how the PGA Tour operates. They’ve been able to get by with manipulative, coercive, strong-arm tactics because we, the players, had no recourse. As nice a guy as [PGA Tour commissioner Jay Monahan] comes across as, unless you have leverage, he won’t do what’s right. And the Saudi money has finally given us that leverage. I’m not sure I even want [the SGL] to succeed, but just the idea of it is allowing us to get things done with the [PGA] Tour.

Phil said aligning with the Saudis would be worth the risk if such an allegiance would force the PGA Tour into making financial changes beneficial to him and others. But a bunch of the PGA Tour’s biggest names, including Justin Thomas, Rory McIlroy, Dustin Johnson, and Bryson DeChambeau, pledged their allegiance to the Tour and said if Phil wants to golf in Saudi Arabia so bad, he can take his clubs and KPMG hat and go golf there. But the SGL is now dead, and so is Mickelson’s sponsorship with KPMG, which began in 2008. In a L-O-N-G statement released today, Mickelson apologized for his “reckless” comments. He also said:

I have incredible partners, and these relationships mean so much more to me than a contract. Many have been my most influential mentors and I consider all of them lifelong friends. The last thing I would ever want to do is compromise them or their business in any way, and I have given all of them the option to pause or end the relationship as I understand it might be necessary given the current circumstances.

A Statement from Phil Mickelson pic.twitter.com/2saaXIxhpu

— Phil Mickelson (@PhilMickelson) February 22, 2022

That was all KPMG needed to cut off Phil’s supply of blue, black, and white KPMG hats permanently. According to Golf Channel, KPMG said in a statement this afternoon:

KPMG U.S. and Phil Mickelson have mutually agreed to end our sponsorship effective immediately. We wish him the best.

Phil’s old KPMG hats were not available for comment. And @MickelsonHat is no more:

Oh well. Good luck, Phil. We enjoyed our time writing about your antics in all of their KPMG gloriousness through the years.

The post You Won’t Be Seeing Phil Mickelson Wearing a KPMG Hat Ever Again appeared first on Going Concern.

Big Salary increases for senior auditors moving to RSM – Seattle. Nearly $100k plus bonus for 2-3 years of experience.

Current supervisors and managers making $80k – $96k.

No plans to bump the loyal employees…..

On one hand, good for those seniors taking advantage of the obvious desperation for audit seniors in the RSM Seattle office. Browsing through the RSM 2021 Comp Thread on r/accounting, the highest senior 1 salary in audit I could find was $78,000, and for senior 2s, the highest was $82,000, so a base salary of just under $100,000 plus a bonus for that position is quite the pay bump. This doesn’t account for the mid-year salary adjustments RSMers received a couple months ago.

On the other hand, audit supervisors and managers cannot be pleased and are probably updating their resumes behind the scenes. No wonder managers are leaving public accounting en masse right now. They’ve had enough of this shit—being overworked and underpaid. And that has had a trickle-down effect made worse during busy season, as seniors are taking on the workloads of the recently departed managers and second-year associates are handling the workloads of seniors.

Our tipster said, as of now, RSM hasn’t increased salaries in the Seattle office for managers and supervisors to adjust for what the firm is allegedly offering seniors in audit. The tipster added:

It’s no wonder why managers and supervisors are leaving in droves. The firms have hurt themselves with this money game for people with very little experience.

Is this happening in any other RSM US offices? If so, get in touch with us using the contact info below. All tips will be kept anonymous.

Related articles:

Compensation Watch ’21: Did RSM US Make It Rain On Employees This Year?
Compensation Watch ’21: RSM US Employees Are Starting to Leak Their Mid-Year Raises

The post One RSM US Office Might Want to Rethink Its Retention Strategy For Managers and Supervisors appeared first on Going Concern.

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This came through the tipline a little bit ago:

To be announced later today, two top 20 firms will merge and create a new top 10 firm.

Our tipster proceeded to give us a hint that narrowed the field down a bit:

It’s two praxity alliance firms.

The Praxity website has the following accounting firms as members:

• Aronson
• BKD
• Dixon Hughes Goodman
• Kaufman Rossin
• Mazars USA
• Moss Adams
• Plante Moran

Based on INSIDE Public Accounting’s most recent top 100 list of public accounting firms by revenue, we can take out Aronson, Kaufman Rossin, and Mazars as possible merger candidates, as each of those firms are outside of the top 20. That leaves BKD, DHG, Moss Adams, and Plante Moran.

Because our tipster works at BKD, we’re going to assume that BKD is the firm merging with either DHG, Moss Adams, or Plante Moran. We were told the announcement will be made at 2 p.m. CT today.

The 10th largest firm in the US currently is Crowe, with revenue of $925,856,000, according to IPA’s 2021 ranking of public accounting firms. BKD, the 14th largest firm, had revenue of $758,121,000. If BKD merged with either of Moss Adams (12th), Plante Moran (13th), or DHG (17th), in all three scenarios the combined firm’s revenues would be greater than Crowe’s.

We’ll keep you updated once the merger news breaks.

[UPDATE 1:] While we await the official announcement of which firm BKD is merging with, several sources have told me it is DHG. Will it be called BKDHG? Are they going to go old school and call it Baird, Kurtz, Dobson, Dixon, Hughes & Goodman? What’s going to happen to Ben and Kate? We’ll find out shortly.

[UPDATE 2:] It’s now official (told you so): BKD and DHG are hooking up. But according to a press release from BKD, the new name of the firm won’t be announced until a later date. Here is the full press release:

The leading accounting firms of BKD and DHG today jointly announced they have agreed to merge to create a new, Top-10, national professional services firm with $1.4 billion in revenue, setting the stage for a national growth strategy.

With complementary operations, geographies and nearly two centuries of legacy service between them, the two firms together will operate under a new firm name that will be announced at a later date. The new firm will provide deep industry focus, expanded advisory services, and outstanding career opportunities, building the foundation required for long-term growth and a stronger national presence with a gateway to global expansion. The merger of equals is expected to close in the second quarter of 2022, subject to the satisfaction of customary closing conditions.

Tom Watson, current CEO of BKD, will serve as the CEO of the new organization; and Matt Snow, current CEO of DHG, will serve as the Chair. The two industry leaders said the merger will create a firm that is primed for growth in the current business landscape.

“For years, both BKD and DHG have built strong reputations as high-value, professional client service firms,” said Watson. “We’ve established complementary geographic footprints and strong capabilities in a range of critical service sectors. Together, as one organization, we will deepen our bench strength even further, allowing us to continue to serve our existing client base while also providing the resources necessary to serve an ever-increasing upstream client base.”

Snow added that the strengths of the two companies will help clients better navigate the dynamic commercial landscape.

“I couldn’t be more thrilled to join forces with BKD. The scale of our combined firms, our collective talent and similar cultures will translate to tremendous benefits for our clients and team members,” said Snow. “Both of our firms have an overlapping industry focus in healthcare, financial services and private equity, coupled with other industry sectors where each legacy firm is individually strong. As one organization, we will be able to bring our capabilities to a broader range of clients, providing more innovative, client-centric services to the market.”

The new firm will have a significantly larger national presence, ranked number 8, allowing it to quickly pivot to new market opportunities as they arise and expand its reach. It will have more than 5,400 team members across 68 markets in 27 states, including the United Kingdom and the Cayman Islands. For clients, this brings greater opportunity for more onsite, personalized attention from professionals, regardless of location.

Key merger highlights are as follows.
Strategically Compelling for Both Organizations

• Builds a national firm with $1.4 billion in revenue, uniquely positioned to deliver outstanding opportunities for team members and clients.
• Merges two, well-established firms with strong operating histories spanning nearly 100 years.
• Positions the firm for continued growth, expanding the breadth of services available to each firm’s current client bases while deepening the resources required to serve larger private and Fortune 1000 advisory clients.
• Beneficial for Clients and Team Members
• Broadens geographic reach, placing experienced talent in several key markets to provide onsite services more efficiently.
• Builds scale in key industry areas and client service segments, creating synergies within existing industries and expanding the reach of others to a total of 10 national industry practices.
• Builds new career development opportunities across industry verticals and geographic locations.
• Improves national market recognition, supporting growth of non-audit related services to better serve clients, including those in the Fortune 1000.
• Positions the firm as a destination employer with a people-driven culture.

Feel free to speculate below on what the new BKD/DHG firm’s name will be.

The post Rumor: BKD Is Going to Merge With Either DHG, Moss Adams, or Plante Moran Today (CONFIRMED: BKD and DHG) appeared first on Going Concern.

EY today confirmed the news we broke in October that Kelly Grier would not seek a second four-year term as US chair and managing partner and EY Americas managing partner. The person who will step into that role later this summer is Julie Boland, current EY vice chair and managing partner of the firm’s Central Region.

The only time Boland has appeared on Going Concern was Jan. 16, 2014, when Caleb mentioned her becoming the first female managing partner of EY’s office in Cleveland. She served as Cleveland MP until being named vice chair and Central Region managing partner in 2018, succeeding, you guessed it, Kelly Grier. Here is the release EY sent out this morning announcing Boland’s appointment:

EY announces the election of Julie Boland as EY US Chair and Managing Partner and appointment as Americas Area Managing Partner for a four-year term beginning on July 1, 2022. Julie Boland will succeed Kelly Grier, who after an eminent 30-year career with the organization has elected not to stand for another term as EY US Chair and Managing Partner and Americas Area Managing Partner and will retire from EY when her term ends on June 30, 2022.

Since 2018, Julie has served as US-Central Region Vice Chair and will now lead the EY US Firm and the EY Americas geographic area, which represents more than US$21.2b in combined revenues and more than 81,000 people in member firms in 31 countries. She will lead the US Executive Committee, Americas Operating Executive and join the EY Global Executive committee, which sets the firm’s global strategy and agenda.

Grier has had an extraordinary tenure in the role. She transformed EY’s business and operating model while accelerating innovation and growth. She led the firm to achieve record results while prioritizing EY’s people and audit quality through the extraordinary times of the pandemic. Grier’s leadership helped EY US achieve record revenue and profits, gains in market share and strengthened audit quality, increased investment in the business and people, redoubled focus on DEI and brand leadership among competitors.

In addition to US-Central Region Vice Chair, Julie Boland has served in many leadership roles at EY, including as Cleveland Office Managing Partner and Senior Advisory Partner and Global Client Serving Partner on some of the Firm’s largest clients. She is a member of the US Executive Committee, the Americas Operating Executive, the Global Practice Group and the Global Accounts Committee. Julie is a CPA and started her career in the Audit practice of another Big Four firm. She worked for two global investment banks leading up to her CFO roles at publicly- and privately-held companies.

“I am honored to be chosen to lead this innovative organization at such a pivotal and exciting time for the business,” said Boland. “We are committed to building a better working world by empowering and inspiring our people to realize their true potential, and I look forward to building on the significant legacy and strong foundation built by all our partners and our people.”

Carmine Di Sibio, EY Global Chairman and CEO, said, “Julie’s three decades of experience and track record for driving market leadership, developing and retaining talent, and instilling exceptional client service perfectly suit EY’s commitment to transformation and growth. I look forward to working with Julie and her team to advance the success of our people, clients and all of EY.”

Kelly Grier shared, “Julie is a purpose-driven leader and helps our people grow and develop in their careers — all while advancing our commitment to diversity, equity and inclusion and fostering a culture of belonging. She is known for emphasizing the importance of quality as a priority for EY teams, and has an exceptional record of growth, client service and sector leadership.”

Di Sibio added, “Kelly has built a strong foundation for continued momentum. Under her leadership, organizational transformation led to greater investment in our people, culture, quality and growth.”

OK, EYers—how do you feel about Julie Boland taking the big chair?

Related article:

EY US Chair Kelly Grier Will Not Seek a Second Term

The post EY Has Picked Kelly Grier’s Successor As US Chair and Managing Partner appeared first on Going Concern.

With that unpaid endorsement out of the way, here’s a fraud that is unlikely to make Caleb and Greg’s podcast anytime soon, but it involves Heidi Royal, an accountant for a wealth management firm, who fessed up on Valentine’s Day to bilking an old woman suffering from dementia out of about $800,000.

The Atlanta-based wealth management firm is not named in the release from the US Attorney’s Office for the Northern District of Georgia, but an online search shows a Heidi Royal who was an accounting manager at Homrich Berg, a personal wealth management firm based in Atlanta. Here are the gory details from the office of US Attorney Kurt R. Erskine:

Heidi Royal, who was employed as an accountant at an Atlanta-based wealth management firm, has pleaded guilty to federal charges arising from a scheme to defraud one of the firm’s clients.

According to Erskine, the charges and other information presented in court: Heidi Royal’s employer was registered with the US Securities and Exchange Commission as an investment adviser. The firm provided investment advice and financial services to C.K., an elderly widow suffering from dementia.

As the firm’s Accounting Manager and Bill-Pay Supervisor, Royal had access to C.K.’s Social Security Number and the usernames and passwords for C.K.’s investment accounts and bank accounts. As part of her duties and responsibilities at the firm, Royal provided professional accounting services and bill-pay services to C.K. for more than 10 years. During that time, Royal gained C.K.’s trust and developed a close personal friendship with her. Royal even told a co-worker at the firm that C.K. was like a grandmother to her.

As a person associated with an investment adviser, Royal owed a fiduciary duty to each of the firm’s clients, including C.K., and Royal was required to act in C.K.’s best interests at all times. Royal was not permitted to pay her own debts and expenses with C.K.’s money.

From approximately June 1, 2010, through March 17, 2021, however, Royal misappropriated approximately $800,000 of C.K.’s money and converted it to her own use.

As part of the scheme, Royal stole C.K.’s annuity payments, wrote more than 200 fraudulent checks on C.K.’s bank accounts, forged C.K.’s endorsement on checks, withdrew cash from C.K.’s bank accounts and converted it to her own use, fraudulently used the electronic bill-pay feature associated with C.K.’s bank accounts to divert money to herself, used PayPal to make electronic payments to herself from C.K.’s bank accounts, impersonated C.K. in telephone conversations with financial institutions; and made false and misleading entries in C.K.’s financial records to make the fraud harder to detect.

In addition, Royal fraudulently used C.K.’s name and Social Security Number to open a secret bank account for the purpose of concealing and disguising the fraud proceeds.

In mid-March 2021, when the firm learned that checks drawn on C.K.’s bank accounts had been deposited into Royal’s personal accounts, the firm immediately terminated Royal and reported the matter to law enforcement.

Royal, 52, a resident of Dallas, GA, pleaded guilty on Feb. 14 to wire fraud and aggravated identity theft, according to the US Attorney’s Office. She is scheduled to be sentenced on May 31.

A spokesperson from Homrich Berg sent us the following statement regarding Royal’s actions: “Homrich Berg became aware of suspicious transactions involving a former back office employee involving one client. Given the seriousness of the accusations, HB quickly terminated the employee and has been actively working with the client and law enforcement to ensure that the case is handled swiftly and appropriately. The result of this cooperation was a guilty plea entered by the former employee. Our findings and the findings of an outside forensic accountant confirmed our belief that this misconduct was limited to one employee and one client.  We reimbursed the client for lost funds and believe this was a unique situation that will not occur again.”

The post Accountant Behaving Badly: There’s a Special Place In Hell For Someone Who Steals $800,000 From an Elderly Client With Dementia appeared first on Going Concern.

The letter from Mazars was submitted by New York Attorney General Letitia James, whose office is investigating whether the former president undervalued his properties, such as his golf courses, to avoid paying a hefty tax bill. She is also looking at whether the Trump Organization overstated the value of its properties to banks to get better deals on loans. And to no one’s surprise, the Trump Organization has denied those claims and is currently trying to halt the civil investigation in court.

A separate criminal investigation is being led by the Manhattan district attorney, whose office alleges that the Trump Organization doctored tax records to avoid paying taxes.

In the letter, dated Feb. 9, Mazars said it’s now considering that decade’s worth of Trump Org financial statements that the firm compiled unreliable based on court filings made by James on Jan. 18, its own internal investigation, and “information received from internal and external sources.”

The firm added:

While we have not concluded that the various financial statements, as a whole, contain material discrepancies, based upon the totality of the circumstances, we believe our advice to you [Trump Organization] to no longer rely upon those financial statements is appropriate.

As we have stated in the Statements of Financial Condition, Mazars performed its work in accordance with professional standards. A subsequent review of those workpapers confirms this.

Now here’s the part where Mazars dumps Trump:

Due in part to our decision regarding the financial statements, as well as the totality of the circumstances, we have also reached the point such that there is a non-waivable conflict of interest with the Trump Organization. As a result, we are not able to provide any new work product to the Trump Organization.

After watching The Break-Up for the third time in a row, eating a gallon of cookie dough ice cream, and waiting until their tears finally dried, the Trump Org released this statement, which attorney and The Bulwark columnist Philip Rotner said contains a lie—and also something telling about Mazars:

“While we are disappointed that Mazars has chosen to part ways, their February 9, 2022 letter confirms that after conducting a subsequent review of all prior statements of financial condition, Mazars’ work was performed in accordance with all applicable accounting standards and principles and that such statements of financial condition do not contain any material discrepancies. This confirmation effectively renders the investigations by the DA and AG moot.” [Emphasis added.]

The key point in the Trump statement—that Mazars had confirmed that Trump’s financial statements “do not contain any material discrepancies”—is a lie.

The Mazars letter says nothing of the sort. The whole point of the Mazars letter was to warn potential users that the Trump Organization’s statements of financial condition are unreliable.

Rather than representing that the statements contained no material discrepancies, as the Trump Organization claims, Mazars said only that it had “not concluded that the various statements, as a whole, contain material discrepancies, based upon the totality of the circumstances” (emphasis added).

This self-protective statement from Mazars is so opaque and vague as to be meaningless. What are the “various statements” that Mazars refers to? All ten years of them? Some of them? Parts of them? And what does “taken as a whole” mean? That some were inaccurate, but not all? That each was inaccurate standing alone, but not all ten years taken together? Who knows.

Is that “self-protective statement” from Mazars a way of saving its ass from potential sanctions and litigation down the road? Does the firm have any culpability at all for this entire mess? The Washington Post asked that question to Barbara McQuade, a former federal prosecutor who is with the University of Michigan Law School, who said it’s possible:

“This effort to distance themselves could be an effort at self-preservation,” she said. It depends on whether Mazars knew the information it was getting from the Trump Organization was false or whether it was misled, too.

I wondered what some accounting professors had to say about whether Mazars is blameless or shoulders at least some of the blame in this matter. So I reached out to several yesterday to get their opinion.

Erik Boyle, PhD, CPA, a former KPMG auditor who is now an assistant professor of accounting at Idaho State University, said he doesn’t think there’s enough of a case right now to sanction Mazars because the firm’s engagement with the  Trump Organization was a compilation engagement—something Rotner also mentions in his column for The Bulwark.

In an email, Boyle said: “A compilation engagement follows guidance from the Statements on Standards for Accounting and Review Services (SSARS) issued by the AICPA. AR-C Section 80A paragraph .02 states, ‘Because a compilation engagement is not an assurance engagement, a compilation engagement does not require the accountant to verify the accuracy or completeness of the information provided by management or otherwise gather evidence to express an opinion or a conclusion on the financial statements’ (emphasis added).

“However, paragraphs .13-.16 state that, in the course of the compilation agreement, if the accountant becomes aware that the accounting policies issued by management, or ‘the records, documents, explanations, or other information, including significant judgments, provided by management are incomplete, inaccurate, or otherwise unsatisfactory,’ then the accountant should ‘request additional or corrected information,’ and failing that, then the accountant should withdraw from the engagement.

“Culpability should be determined based on the timing of when Mazars was able to determine that the information they were receiving could not be relied upon. In their letter dated 2/9/22, they indicate that this determination occurred only recently as a result of ‘filings made by the New York Attorney General … our own investigation, and information received from internal and external sources.’ If this is true, then they would likely not be found culpable. If a deeper investigation determined that they signed off on financial statements when they had reason to doubt the reliability of the information provided by management, then they should be found in violation of professional standards and would have some culpability.

“The other consideration to be aware of is that their letter is only stating that the financial statements cannot be relied upon because Mazars feels there are significant enough concerns about the reliability of the information they were provided. However, this is different from stating that the Trump Organization’s financial statements are misstated. Because Mazars hasn’t conducted an audit of the Trump Organization financial statements, they aren’t able to issue an opinion as to whether or not the financial statements are actually misstated.”

Dr. Boyle wasn’t the only academic who had something to say about whether Mazars is at all at fault. Here’s what other accounting professors told me via email:

Steven Mintz, PhD
Professor Emeritus of Accounting
California Polytechnic State University

Accountants should ensure that the financial statements are accurate and reliable and do not contain any material misstatements, but they are not guarantors that fraud does not exist. Accountants should retract previously issued financial statements when they believe they can no longer be relied upon. This protects the public interest—that of investors and creditors. This is the appropriate step to take because trust between Mazars and the Trump Organization has been lost. There’s no way Mazars should perform future services for the organization when they doubt the veracity of the financial information provided to them.

Trust is important between accountants and their client. Accountants should not necessarily abandon clients because financial statements have been retracted. It’s better to work with the clients and clean up their financials so they can start to be relied upon. However, if the accountants don’t trust the numbers provided by the client, then it’s time to withdraw from the engagement. No matter what happens, Mazars must maintain the confidentiality of Trump’s financial and tax information, unless they are under a court order to disclose perhaps in the lawsuit against the Trump Organization.

One question is why it took 10 years for Mazars to figure it out. If they were to be investigated by the state board of accountancy, this question would surely come up. I don’t think they would automatically be investigated (or sanctioned) because they retracted 10 years of financial statements. Retraction occurs from time to time, although 10 years clearly shows a pattern of wrongdoing by the Trump Organization. However, if it comes out in court that they were somehow complicit in the likely fraud, then an investigation would surely ensue. Mazars can also be sued by investors and creditors who had/have a financial interest in the Trump Organization if their financial interest has been compromised by the organization’s actions.

Randal Elder, PhD
Dixon Hughes Goodman Term Professor and Head of Department of Accounting and Finance
University of North Carolina, Greensboro

Well, this has certainly attracted a lot of attention. One key thing is that most people will read the headlines and think these are audited financial statements for a public company. It would certainly be concerning if an auditor indicated you could not rely on 10 years of audited financial statements.

However, from what I understand, these were compiled personal financial statements using fair values provided by the client. So, unless they knew those values were clearly incorrect, I don’t think they are culpable. However, this is based on limited information about the actual financial statements and report on them.

John DeJoy, PhD, CPA
Associate Professor of Accounting and Corporate Ethics
Clarkson University

A compilation provides no assurance by the accountant. The accountant is not expected to perform tests or analytical procedures in a compilation. Compilations are the lowest level of financial statements, below reviews and audits. In a compilation, the company’s management (i.e., the Trump Organization) assumes all responsibility for the financial statements. Compiled financial statements do not need to be prepared according to US GAAP standards and the accountant is not required to be independent of the client. This should be made clear in an engagement letter between the accountants and management. In general, it is management who assumes the risk in compiled financial statements, not the accountant.

Also, the big picture takeaway is that, according to reporting, these were not AUDITED financial statements and should not be relied upon for financial decisions, such as granting credit/loans. I assume banks and other lenders would understand this and seek audited financial statements before granting loans. A general reader of the news reports, however, may assume these were audited financials or that all financial statements prepared by an accounting firm are audited. This, of course, is erroneous.

Allen Blay, PhD, CPA
Accounting Department Chair and EY Professor of Accounting
Florida State University

I wouldn’t be surprised if someone sued them if it became clear the financial statements were in some way fraudulent, but they didn’t actually take any responsibility for the statements and shouldn’t have any liability. They did not sign off on the financial statements, unlike what many of the articles covering this state. I’ve seen several articles saying they “signed off” on the statements. That is not an accurate depiction of what they did. All they did was compile, or in some cases prepared, the financial statements. That means they took the information given by the Trump Organization and prepared a set of financial statements from them. They did not perform any procedures on the information, nor did they provide any assurance. This was not an audit or a review where there is assurance. In fact, it appears they specifically stated that the organization did not follow GAAP.

So although they might get sued by Trump, or possibly by someone who contracted with Trump if they lose money as a result of relying on the statements, I don’t see much that Mazars did that would result in real legal liability (presuming they followed the standards for compilation engagements, and there is nothing that indicates they didn’t).

Agree or disagree with anything this group of accounting professors said regarding the Mazars/Trump situation? Do you think Mazars is in any way culpable in this matter? Feel free to let ’er rip in the comment section.

Why Trump’s accounting firm ditched him [Washington Post]
Mazars Thumps Trump [The Bulwark]

The post Does Any Blame Lie With Mazars USA In Trump Organization Financial Statement Mess? appeared first on Going Concern.

Awww, so sweet. Do you have a sweet message in return for EY? Eh, probably not. They would probably be more along the lines of:

• I Quit
• EY Sux
• Mo’ Money
• #1 PTO
• W&P (Waffles & Pancakes) or one for Waffles and one for Pancakes

Any others? Keep ’em short. Have some fun with it. Put them in the comments or you can submit them to us using the contact info below. All entries will be kept anonymous.

The post EYers, What Would Your Candy Heart Message Be to EY On Valentine’s Day? appeared first on Going Concern.

While some #TaxValentines offer tax advice in a hokey way, others creatively gripe about their busy season problems. More accurately, creatively gripe about schedules K-2 and K-3:

Roses are red
Your tax pro’s blue
Ruing the debut of
Schedules K3 and K2 #TaxValentines

— Phyllis Jo Kubey (@PKubeyEA) February 14, 2022

Roses are red,
With thorns you can see,
I’d rather be pricked ‘til I bleed,
Than deal with Schedules K-2 and K-3. #TaxValentines

— Justin Miller (@justinmilleresq) February 11, 2022

New Schedule K2
If you have foreign affairs
Feds are watching you#TaxHaiku #TaxValentines pic.twitter.com/iYuPoDpr9U

— Jeremy Stephens (@J_Stephens_CPA) February 11, 2022

Instructions are read
For K-3 and K-2
Extensions for all
'Til we know what to do.#TaxValentines

— Jeanne (@JLWCPA2) February 10, 2022

Returns aren’t filed, We are feeling blue, But if there is no 1116, You can skip the K2.#TaxValentines #TaxTwitter @TaxNotes

— Jeff Kristoff (@jckristoff) February 12, 2022

Roses are red
Form 1065 is no fun
When you formed a partnership
And didn’t intend to be one#TaxValentines

— Sierra Williams (@SierraWilliams) February 11, 2022

Roses are Red.
Pansies are pale.
Can IRS please.
Open the mail?
‘#TaxValentines #Taxtwitter

— Lafayette Ket (@Lafayette_Ket) February 13, 2022

Roses are red
And so is my pen
Which is lonely now that
Review notes are typed instead#TaxValentines

— Jesica Abella EA, ABA (@Jesella) February 11, 2022

Roses are red
Your accountant might be blue
If you want to make them happy
Don’t send your documentation after it is due#TaxValentines

— Justin Miller (@justinmilleresq) February 10, 2022

On second thought, guys, don’t quit your day job. Jk. XOXO.

Related articles:

#TaxTwitter Has Absolutely Had It With Clients’ Sh*t
Busy Season Problems: ‘This Is My Last One, I Swear;’ K-2/K-3 Is Not OK; Shadowy JPEGS

The post Tax Preparers Use Valentine’s Poetry to Express Their Busy Season Problems appeared first on Going Concern.

Kate Moss has reportedly sold her mansion in Highgate, London for a whopping £11.5million as she seeks to swap city living for life in the country.

The model, 48, has made a £4.25million profit on the home, located next door to George Michael’s former house, which she bought 11 years ago for £7.25million.

According to The Sun, Kate put the property on the market at the end of last year and it was bought by a partner at accountancy firm PWC.

If any of our PwC friends across the pond know or are willing to speculate on who that partner is, get in touch with us using the contact info below. All tipsters are kept anonymous.

Kate Moss ‘sells her Highgate mansion for £11.5million as she swaps city living for life in the country’ [Daily Mail]
Kate Moss flogs Highgate mansion for £11.5m and quits London for the countryside [The Sun]

Related article:

So How Much Did PwC U.K. Partners Rake In This Year?

The post CONFIRMED: One PwC UK Partner Is Filthy Rich appeared first on Going Concern.

Well … there’s the new schedules K-2/K-3 requirements for pass-through entities (see Michael Rapaport’s article for Bloomberg Tax on the new IRS foreign income reporting requirements for partnerships), which is driving tax pros completely out of their minds:

This K2/K3 nonsense has me seriously thinking about switching careers. #TaxTwitter

— Nicole Davis (@wifemomcpa100) February 10, 2022

This is horseshit. The pile of returns sitting on my desk on February 8th because I am/or was waiting for K2/K3 guidance, Rev. Proc. 2021-48 stmt., forms to be finalized. pic.twitter.com/y5ianLlPXi

— StevenFCPA (@stevenfcpa) February 8, 2022

The whole K2/K3 fiasco is a going to make a lot of competent and dedicated tax preparers quit, but the ones who break the rules and don't know what they're doing/missing will continue unabated.

— Matt Foreman (@ForemanTaxLaw) February 7, 2022

The k2/k3 "crisis" is sad. I truly think the IRS will revise their guidance because there is no reason for a PTE to have any effect on a form 1116 filed on a 1040. On top of that few PTE returns will be preoared with a k2/k3 this year no matter what the IRS does.#taxtwitter

— Mike Sylvester, CPA (@MikeSyl36625988) February 7, 2022

Do you know what made me cry just now?

Thinking about me figuring out how to do K2/K3 reporting.#DonutTwitter

— Jeff Breeden (@CPAJeff) February 4, 2022

The answer is SIMPLE for this K2/K3 issue. This filing requirement has to be delayed at least a year.

The IRS isn’t even ready to handle this. Can’t file forms until AFTER the due date?

This is crippling to taxpayers and our industry. @AICPA help!!! #TaxTwitter

— Kyle Rehnstrom (@KyleRehnstrom) February 4, 2022

And here are some we’ll file under “Miscellaneous”:

I love the smell of tax season – it’s despair mixed with the burning smell from an overused scanner

— Andrea Carr CPA (@andreacpa0) February 10, 2022

Every time. #TaxTwitter pic.twitter.com/ENBkOMrGoU

— Matthew J. Cordes, EA (@cordes_tax) February 10, 2022

"Can I just email you my tax forms?"

#taxtwitter #fintwit #accountantsoftwitter pic.twitter.com/Ilf2dOtodY

— JarynT (@TrinkiesM) February 10, 2022

In almost every case..

I will 100% be willing to discuss lowering my fee..

If you will only..

STOP RUNNING EVERY TRANSACTION IMAGINABLE THROUGH PAYPAL!! #TaxTwitter

— Garrett Alexander, CPA (@YourLocalTaxGuy) February 9, 2022

Related article:

#TaxTwitter Has Absolutely Had It With Clients’ Sh*t

The post Busy Season Problems: K-2/K-3 Is Not OK; Weird Smells; Shadowy JPEGS appeared first on Going Concern.

But we haven’t heard much at all about dissatisfaction among the smiling-faced campus recruiters whose job it is to convince bright-eyed accounting students to come work at their dumpster fire of a firm fun, energetic, culture-first, competitive-paying firm that offers unlimited career growth potential. Until now.

We got this tip on Monday evening:

There’s a mass exodus of campus recruiters happening at BKD, 5 have left in the last week. Poor management of the talent acquisition team combined with extremely low pay for recruiters has everyone jumping ship to competing firms.

Of those five, the tipster let us know that one is leaving for a top 10 firm whose name rhymes with “bro,” one is leaving public accounting altogether, and the others are going to smaller accounting firms.

We don’t know how accurate this is currently, but a quick check on Glassdoor shows the typical BKD campus recruiter salary is $71,365; however, campus recruiter salaries at BKD can range from $58,801 to $79,858. On Indeed, though, the average annual salary for a BKD campus recruiter is $49,524, with a range of $44,938 to $54,578.

When asked if the job of recruiting potential new BKDers has become more difficult in the past year or so during the Great Resignation, our source said:

I wouldn’t say it’s gotten too bad for campus recruiting right now, up until just recently there was a lot of seniority on the team and everyone had their shit together but there has been a lot of turnover in some practice units which has put a lot of stress on campus recruiters. They recently promoted a few CRs to senior CR which came with no pay increase and more work on top of doing everything on their own in each practice unit. It’s not sustainable unless they just expect this position to turn over every 2-3 years.

The structure of the team is 2 managers (of 18 recruiters) and 1 director and despite having done the role themselves they don’t care about the environment we’re in. They just demand more projects and more process improvements weekly. Extremely secretive environment and higher level projects are kept secret until they get approved without considering the impacts on the team (they do this because they don’t want anyone to have an opinion on the way projects are being guided). IT’S WILD.

I hope BKD sees this and makes some changes for the sake of the entirely new group of recruiters they bring in.

Anyone else aware of an exodus of campus recruiters at your firm? Let us know by using the contact information below. All tipsters will be kept anonymous.

Related articles:

Congratulations, Public Accountants, the Reality of Your Miserable Career Made the Mainstream
Compensation Watch ’21: BKD Is Handing Out Mid-Year Raises But It’s Anyone’s Guess As to How Much

The post Some BKD Campus Recruiters Are Making the Great Escape appeared first on Going Concern.

We’ll help you mine (see what I did there) through all the clutter by presenting links to some of the articles about the big KPMG news. But we’ll start with this tweet from KPMG of the Canadian variety:

We have just completed an allocation of cryptoassets to our corporate treasury, our firm’s first of its kind investment in the asset class. This includes Bitcoin and Ethereum tokens, and carbon offsets to maintain a net-zero carbon transaction: https://t.co/32hsKbnGuC

— KPMG Canada (@KPMG_Canada) February 7, 2022

Crypto is volatile, but KPMG Canada just added bitcoin and ether to its balance sheet. Here’s why [Marketwatch] “We believe in the long term value of crypto assets,” Kunal Bhasin, blockchain co-lead at KPMG in Canada, said. “We’ve been advising a lot of our clients in terms of how they should be thinking about it. And this is just us putting our skin in the game.”

KPMG Canada Adds Bitcoin, Ethereum to Corporate Balance Sheet [Bloomberg] “[W]e’re confident we can guide clients and prospective clients through the process of cryptoasset treasury allocation,” KPMG said in the email. “Our investment allows us to share our journey, our experiences, our challenges with them so that we can help them navigate the cryptoasset world.”

KPMG Canada Adds Crypto to Its Balance Sheet [CoinDesk] In a press release, Kareem Sadek, advisory partner of cyprotassets and blockchain services at KPMG Canada, noted that “we’ve invested in a strong cryptoassets practice and we will continue to enhance and build on our capabilities across decentralized finance (DeFi), non-fungible tokens (NFTs) and the metaverse, to name a few.”

KPMG in Canada Adds Bitcoin and Ethereum to Its Corporate Treasury [Coinspeaker] KPMG Canada acquired the digital assets through Gemini Trust Company’s execution and custody services. Before approving the treasury allocation, the Toronto-based firm formed a governance committee to review the regulatory, reputational, and custodial risks. The committee included stakeholders from finance, risk management, advisory, audit, and tax. Furthermore, KPMG specialists assessed the tax and accounting implications of the digital currency transaction.

Bitcoin leads crypto market bounce back as major firms Tesla and KPMG confirm holding [Express] Bitcoin has risen over 17 percent in the last five days to break back past the key $40k threshold. The digital coin now stands at £32,210 ($43,544). Ethereum meanwhile, which remains the second biggest cryptocurrency, has seen its price recover back past $3k to reach £2,242 ($3,075). Both currencies have benefited from a number of companies revealing their investments recently in a growing sign of digital assets becoming more mainstream.

And then there was this funny tweet about it earlier today (h/t @TheBig4Tweets):

So KPMG, one of the 'big three' global accounting firms, has #Bitcoin on its balance sheet now & people still think it won't catch on as part of corporate reserves?

HFSP

— Alistair Milne (@alistairmilne) February 7, 2022

So which firm got kicked out of the Big 4? EY? Yeah, probably EY.

The post Soooo KPMG Canada Did a Thing Yesterday appeared first on Going Concern.

Today’s “Accountant Behaving Badly” comes via a tip from a reader. Usually public accounting firm partners get into trouble for insider trading, participating in some elaborate fraud, or sexually harassing a subordinate. But Cherry Bekaert partner William Billips got himself into trouble for allegedly going on a rampage after getting kicked out of a Nashville pub a little before 10:30 p.m. on New Year’s Day for being disorderly.

The website Scoop Nashville reported:

As he left [the Corner Pub in Green Hills], police say security video shows him walking to an employee’s vehicle and letting the air out of a tire before he opens the fuel tank door and urinating inside the tank. Not quite done, he breaks off the fuel door and strikes the vehicle with a drill multiple times. He was identified using security camera footage and tracing his purchase to the debit card he used at the bar that night.

The damage Billips reportedly inflicted on that Corner Pub employee’s car totaled about $1,570, according to Scoop Nashville. After the repair bill was filed and the investigation was completed, a warrant was issued for Billips’ arrest. He was booked into the Metro Nashville Jail on Jan. 25 and charged with felony vandalism. He posted a $2,000 cash bond and was released, Scoop Nashville reported.

Cherry Bekaert provided us with the following statement this morning regarding Billips’ Jan. 1 meltdown:

We have been informed of an incident involving William Billips. Our Legal and People & Culture teams are working with William while this is being investigated. We cannot comment on his ongoing personal legal matters. Cherry Bekaert remains committed to providing quality services to our clients.

Billips, a tax partner who is based in Cherry Bekaert’s Nashville office, joined the firm last October, according to his LinkedIn profile. He also had stops along the way at Deloitte, Crowe, KPMG, and most recently EY.

CPA William Billips Urinates In Gas Tank Of Corner Pub Employee After Being Kicked Out Of Bar [Scoop Nashville]

The post Accountant Behaving Badly: Cherry Bekaert Partner Arrested For Allegedly Peeing In Someone’s Gas Tank appeared first on Going Concern.

But last week the PCAOB released another batch of 2020 inspection reports, including the results of RSM’s day with PCAOB inspectors. But instead of following the same path as the Big 4 firms and Grant Thornton by cutting down the number of auditing errors found during the most recent inspection cycle, RSM’s inspection report most resembled BDO’s, which is rarely ever a good thing.

So seven of the 15 audits inspected by the PCAOB weren’t up to snuff, for a deficiency rate of 46.7%. Of the top seven firms, only BDO’s was worse at 54.1%. After having one of the worst PCAOB inspection reports ever in 2017, RSM’s auditing was trending in the right direction, with error rates of only 29% and 20% in 2018 and 2019, respectively. RSM’s response to failing nearly half of the audits inspected by the PCAOB was they take inspections seriously, this will help them improve, we have a long history of audit quality, etc. In other words, they’ll try to do better next time.

A good place to start would be improving audits of internal control over financial reporting, as the majority of errors called out by inspectors had to do with not not performing sufficient testing of the design and/or operating effectiveness of controls selected for testing; not identifying and/or sufficiently testing controls over the accuracy and completeness of data or reports that the issuer used in the operation of controls; and not identifying and testing any controls that addressed the risks related to a significant account or relevant assertion.

Here’s a scorecard of the major deficiencies caught by inspectors in RSM’s audits of internal control and audits of financial statements:

Across the seven deficient audits, inspectors found several instances in which auditing standards weren’t followed correctly, including 12 mistakes regarding internal controls, three in responding to risks of material misstatement, and three in evaluating audit results.

Two of RSM’s seven failed audits were for clients in the financials sector, while two others were for issuers in an unidentified sector, according to the PCAOB. The other three errors occurred on audits for issuers in the communication services, consumer discretionary, and industrials sectors.

More information about RSM’s crappy 2020 auditing report card can be found in the full report below:

The post Auditing Struggle Bus Makes a Stop Once Again At RSM US, Latest PCAOB Inspection Report Reveals appeared first on Going Concern.

We got confirmation over the weekend that Mazars USA leadership recently announced mid-year pay bumps for employees. Our source was a little skimpy on the details, but someone on Fishbowl posted who at Mazars will get what:

ICYMI, here’s a list of accounting firms that have given employees mid-year salary adjustments in the past couple of months:

• Deloitte
• PwC
• KPMG
• RSM US
• BDO USA
• Grant Thornton
• Crowe
• Marcum
• BKD
• CohnReznick
• Plante Moran
• Cherry Bekaert

If we missed a firm that recently doled out mid-year salary adjustments, let us know by using the contact info below.

Related article:

All This Question From Life at Deloitte Needs Is a Two-Word Answer

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The article today by AFR (which is worth your time reading in its entirely) focuses on sexual harassment and bullying complaints at EY Oceania during the past year. AFR reports that EY fully or partially substantiated six complaints of sexual harassment and bullying at its firm in 2021, with another six regarded as inconclusive or unsubstantiated. These findings were recently published in the “Workplace Investigations” section of EY Oceania’s first-ever Value Realised Scorecard:

Take this part of the EY Oceania report with a grain of salt because it’s typical corporate HR speak. And remember, young accountants, HR is there to protect the firm, not to protect you:

We take all complaints seriously. EY adopts a neutral and balanced fact-finding approach that aims to protect the rights of the complainant and the respondent. Every complaint is different and the specific procedure to be adopted in the consideration of each matter will be determined having regard to the circumstances. Methods for managing a complaint can range from informal discreet enquiries to commencing a formal investigation.

There are several different avenues for employees wishing to discuss or raise a complaint formally or informally, they include:

• Any Partner
• Talent Specialist Team
• Welfare Contact Officers
• Ethics Hotline
• Employee Assistance Program
• Mental Health First Aider

Our complaints management process is procedurally fair and thorough, but we also keep a strong focus on employee wellbeing and psychological safety. Outcomes in the past year included informal management, facilitated conversation, verbal warning, written warning, through to financial sanctions/withholding of promotion, and termination of employment.

Partners are most likely the cause of a majority of these harassment and bullying complaints, as recent history has shown us, so that first bullet point is laughable. And even if victims of sexual harassment and bullying at Big 4 firms file a complaint with or speak to any of the options above (or similar ones at their firm), they oftentimes are ignored, isolated, and eventually pushed out, while the accused (again, mostly partners and mostly men) are protected and usually given a slap on the wrist or maybe a stern talking to. Public backlash from media reports sometimes helps, forcing Big 4 firms, which initially protected partners like these, to send them packing, like we saw at EY UK, Deloitte UK, and KPMG UK.

According to AFR, PwC Australia disclosed the firm had reviewed 13 workplace conduct complaints last financial year which led to “a range of outcomes … including dismissal,” Deloitte substantiated 11 complaints that resulted in unspecified “disciplinary action”, and KPMG substantiated 27 complaints with actions taken including formal warnings, pay cuts, and forcing those involved to leave the firm.

With Deloitte, EY, and KPMG in Australia all changing their leadership at the very top within the last year, maybe we’ll see the number of sexual harassment and bullying complaints within these firms decrease in financial year 2022. Maybe.

Half of EY bullying, harassment claims unsubstantiated [Australian Financial Review]

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