Throughout the last decade, Depa has worked closely with C-suite leaders and boards to bring innovative products and services to market, improve client and employee experiences, and help enhance operational efficiencies through technology. Most recently, he served as the inaugural Chief Data and AI Officer at a leading university and health care organization. At the university, he helped to promote AI literacy, launch a responsible AI governance program and enable a secure data foundation. Prior to that, he acted as Senior Managing Director and Global Lead for Data and AI at a global multinational professional services company, where he led a team of AI strategists and data engineers in developing and implementing new products and services

Alright so they’re going to make us Google it. That leading university appears to be Emory and he was appointed to the chief data and AI guy position just last year. Emory did name names in their announcement so now we know the “global multinational professional services company” mentioned in EY’s announcement is Accenture:

Depa comes to Emory from Accenture, a Fortune 50 technology provider, where he served as the senior managing director and global lead for data and AI for the company’s strategy and consulting business. There he managed their award-winning team of global professionals specializing in data science and AI strategy, and served on the global leadership committee. He focused on helping clients in health, life sciences and across industries to leverage data to develop new clinical data products, improve the patient and employee experience and reduce operating expenses.

At EY, Depa will “lead on the discovery and deployment of emerging technologies to help address business challenges and shape the future with confidence.” Translation: “Figure out how the firm can make buckets of money from AI.”

“I’m truly excited to join an organization that is ‘All in’ on its commitment to the transformative potential of emerging technologies,” said whoever wrote this quote attributed to Joe Depa in the press release, referencing EY’s post-Vision 2020 “All In” strategy that hasn’t caught on at all yet. “I look forward to working with the EY teams and clients to help empower them to apply innovation in bold, new ways that help create value for clients through data, AI and emerging technologies to make the world a better place.”

Missed opportunity to fit “build a better working world” in there, Joe. Maybe we’re not using that anymore.

EY’s last Chief Innovation Officer was Jeff Wong who held the position from 2015 until this past summer.

Joe Depa named as EY Global Chief Innovation Officer to lead its global innovation strategy [PR Newswire]

The post EY’s New Global Chief Innovation Officer Says the Thing appeared first on Going Concern.

Audit

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

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

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

Long Reads

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

News

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

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

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

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

Talent

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

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

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

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Law & Order

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

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

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

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

AI

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

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

Academia

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

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

Wrote FT of GT UK’s deal:

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

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

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

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

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

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

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

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

Long Reads

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

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

Audit

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

The Profession

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

Firm Watch

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

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

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

Talent

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

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

ESG

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

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

Fraud

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

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

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

Said Journal of Accountancy of her comments at the conference:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Related:

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

The Big Story

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

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

Firm Watch

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

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

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

Talent

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Municipal Messes

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

Law & Order

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

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

Rules and Regs

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

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

Academia

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

AI

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

Tax

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

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

Ignition has released its 2024 US Accounting and Tax Pricing Benchmark report and it reveals that the 325 Ignition customers surveyed are going all-in on fee increases in 2025. Or at least half-in.

90% plan to increase fees for individual tax returns, 87% plan to increase fees for business tax returns, 85% plan to increase fees for bookkeeping and accounting, and 76% plan to increase fees for CFO and controller services. 57% of accounting firms plan to increase fees across all services in 2025. Clients are just going to loooove that.

Per the 2023 National Association of Tax Professionals Fee Study, the overall average charge for individual returns, regardless of method, increased $35 and the overall average charge for business returns, regardless of method, increased $85. Nearly half of firms surveyed by Ignition (49%) charge $400 to $799 for basic individual tax return services, with approximately 17% nationally charging less than $400.

A few more key findings from Ignition’s survey:

• 54% use fixed-fee or value-based pricing for tax preparation services
• 67% use fixed-fee or value-based pricing for tax planning and advisory services
• 79% use fixed-fee or value-based pricing for bookkeeping and accounting services
• 75% use fixed-fee or value-based pricing for CFO and controller services

The report also benchmarked current fees for tax, accounting, and advisory services, which varied based on firms’ annual revenue range. The greatest variance in pricing was for tax planning and advisory services in particular. For firms with revenue of as much as $250k, about 23% said they charge less than $500 for these services, while a near-equal number (around 21%) said they charge more than $2000.

According to Ignition Global President Greg Strickland, very few firms are raising fees just to raise revenue. “While accounting firm owners are embracing price increases in 2025, the report shows that the majority (around 58%) cite rising business costs as the main motivator,” he said in a press release. “Only 5% are raising prices to increase revenue, which indicates an opportunity for firms to leverage pricing as a strategic tool to unlock revenue growth.”

Here’s what the report had to say:

Heading into 2025, many US accounting firms are re-evaluating their pricing strategies, embracing the need to increase fees for the services they offer, with nearly 57% of firms planning to increase fees next year for all services. As for the extent of these increases, the most common range is from 5% to 10% increase across all services, highlighting an industry-wide shift toward higher pricing.

The rising costs behind price increases

Mounting business expenses are driving the decision to increase fees, with nearly 58% of firms citing rising costs as the primary motivator. This indicates that firms are looking to maintain profitability by adjusting prices to keep pace with inflation, wage increases, and the general cost of running a business in current market conditions.

A missed opportunity for strategic revenue growth?

Interestingly, only around 5% of firms reported increasing fees with the specific goal of growing revenue, revealing a potential gap in how firms are leveraging pricing as a strategic tool. Although covering operational costs is essential, this finding suggests that many firms are not fully capitalizing on the opportunity to use pricing as a proactive driver for revenue growth.

Firms confidently adapting pricing strategies

Whether the goal is to manage rising costs, improve profit margins, or introduce premium service offerings, firms are taking a more strategic approach to pricing services. There is a clear shift from traditional hourly billing toward fixed-fee and value-based pricing models, signaling a broader transformation in how firms are packaging and delivering services. With hourly rates declining in popularity, this shift highlights the growing recognition that pricing should reflect outcomes and results rather than the invested time. By embracing fixed-fee and value-based pricing, firms are positioning themselves to cover rising costs and enhance their client relationships, offering the clarity and value that build long-term trust.

It sure took them long enough to get the memo.

Quick update: Completely related article we posted today.

US Accounting and Tax Pricing Benchmark [Ignition]

The post Citing Rising Costs, Accounting Firms Plan to Increase Fees in 2025 appeared first on Going Concern.

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

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

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

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

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

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

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

Trash cans not included.

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

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

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

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

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

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

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

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

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

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

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

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

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

Shortage? What shortage?

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

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

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

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

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

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

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

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

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

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

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

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

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

Alright, we’re with you so far.

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

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

Accounting firms:

Continuing on:

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

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

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

You can find the full survey here.

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

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

Audit

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

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

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

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

Video

Firm Watch

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

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

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

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

Talent

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

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

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

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

News

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

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

Practice Management

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

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

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

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

By the numbers:

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

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

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

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

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

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

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

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

Revenue and growth by service line:

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

A few areas in which advisory won in FY24:

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

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

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

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

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

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

The obligatory press release:

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

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

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

Dignari salaries from Indeed if anyone’s curious.

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

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

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

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

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

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

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

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

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

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

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

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

Firm Watch

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

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

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

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

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

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

The Future of the Profession

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

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

A Brief Message From Management

Hey people,

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

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

— Going Concern (@going_concern) October 23, 2024

Local

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

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

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

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

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

Rules and Regs

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

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

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

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

Talent

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

AI

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We’re also hearing scattered reports of layoffs at Deloitte US which…what? Evidently they forgot to put some names on the list when they first did this back in August. The good news is some of you will be free to trick or treat with your kiddos next week I guess. Someone should go as a Business Update meeting, that’s about as scary as it gets.

Doesn’t it feel like they’ve been saying consulting work has been slow for a suspiciously long time now? Just going to leave this here.

Comment
byu/AngelaNoelMartin from discussion
indeloitte

Deloitte axes 250 UK employees in performance-related cull [FT]

The post Layoff Watch ’24: Deloitte UK Cuts Another 250 People appeared first on Going Concern.

Posts from the big4
community on Reddit

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

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

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

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

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

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

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

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

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

See if you agree:

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

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

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

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

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

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

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

Firm Watch

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

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

Practice Management

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

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

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

Talent

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

Audit

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

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

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

News

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

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

Technology

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

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

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

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

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

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

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

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

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

If anyone has more info get in touch.

Armanino takes on minority investment [Accounting Today]

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

A press release finally showed up this afternoon.

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

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

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

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

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

LOL at the small text under Preferred Auditor.

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

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

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

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

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

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

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

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

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

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

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

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

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

Literally the same as the last guy.

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

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

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

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

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

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

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

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

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

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

— IRSnews (@IRSnews) October 12, 2024

Happy 10/15, everyone.

Earlier:

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

FT:

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

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

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

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

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

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

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

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

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

News

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

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

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

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

Talent

Is your firm hiring? Are you sick of getting lame resumes? Sign up for Always-On Recruiting from Accountingfly and get great pre-screened candidates with the tech stacks and expertise you need in your inbox every week. It’s free!

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

Crypto

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

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

Audit

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

Salaries

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

Practice Management

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

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

Technology

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

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

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

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

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

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

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

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

Following the infographic is this in big letters:

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

Ohhhh, we get it.

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

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

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

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

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

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

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

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

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

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

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

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

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

Oh no, here it comes.

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

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

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

CC @speakerjohnson pic.twitter.com/gAOs1TBt86

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

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

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

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

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

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

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

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

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

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

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

Added Jamison:

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

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

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

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

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

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

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

It said:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Earlier:

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

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

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

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

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

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

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

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

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

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

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

…

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

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

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

Related:

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

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

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

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

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

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

PayPal Completes Its First Business Transaction Using Stablecoin [Bloomberg]
They paid an EY invoice LOL
PayPal Holdings Inc. completed its first business payment using its proprietary stablecoin as a way to demonstrate how digital currencies can be used to improve often-clunky commercial transactions. PayPal paid an invoice to Ernst & Young LLP on Sept. 23 using PYUSD, the stablecoin the firm launched last year, relying on an SAP SE platform to complete the transaction. SAP’s platform, known as the digital currency hub, allows enterprises to send and receive digital payments instantly, around the clock. The invoice amount wasn’t disclosed.

SEC Charges Olayinka Oyebola and His Accounting Firm With Aiding and Abetting Massive Fraud [SEC]
The Securities and Exchange Commission charged Olayinka Oyebola and his Public Company Accounting Oversight Board-registered accounting firm, Olayinka Oyebola & Co. (Chartered Accountants), with aiding and abetting a massive securities fraud perpetrated by Mmobuosi Odogwu Banye, also known as Dozy Mmobuosi, and three related U.S. companies that Mmobuosi controlled (the Tingo entities). The SEC recently obtained a $250 million final judgment against Mmobuosi and the Tingo entities.

Tax

There’s some Intuit drama coming to a boil. See here:

I just watched two hours of the annual Intuit investor meeting and the Q&A at the end was very interesting.

Poll question at the end.

Please repost this thread so we can gather a lot of opinions about Intuit.

What a change… I actually remember back when Intuit was a partner…

— Mike Sylvester, CPA (@MikeSyl36625988) October 3, 2024

Big 4

After a Deloitte client’s $2.4B tax dodge faltered, the accounting giant won’t say if it helped others exploit the same loophole [International Consortium of Investigative Journalists]
Late last year, the Internal Revenue Service notched a significant win in its fight against high-end tax dodging when a federal judge in Colorado upheld the agency’s challenge to a $2.4 billion tax deduction claimed by Liberty Global, a multinational telecommunications firm. The case, which centered on a complex offshore tax maneuver that generated the huge write-off for the corporation, was described by one industry observer as the “worst nightmare for tax planners” who seek out vulnerabilities in federal tax law. Yet the role of Liberty Global’s own tax advisor — the accounting giant Deloitte — has received little scrutiny, despite U.S. authorities describing the firm as playing a key role in designing the scheme. Liberty Global’s controversial tax maneuver, code-named “Project Soy,” shuffled assets between the firm’s companies in countries such as Belgium, the Netherlands and Slovakia in order to exploit a loophole in a landmark Trump-era tax law, according to court filings. The Justice Department asserted that Deloitte had approached Liberty Global with the original idea for Project Soy, a claim Liberty Global has denied in multiple court filings. If Deloitte did market the loophole, as the Justice Department suggested, it could add to a rich history of Big Four accounting firms selling their well-heeled clients on complex and aggressive ways to avoid tax. It would also raise questions about whether other multinationals received the same advice as Liberty Global — and whether additional challenges could be coming.

Evergrande Auditor PwC China Flops in First US Inspection [Bloomberg Tax]
PwC’s Chinese arm, battered from a $62 million penalty for its botched audits of developer Evergrande, struggled to meet basic US auditing requirements including testing property and equipment values and conflict of interest rules. Public Company Accounting Oversight Board inspectors found fault with each of the seven PricewaterhouseCoopers Zhong Tian LLP audits they reviewed last year, according to results the regulator released on Wednesday.

What’s this?

Just got this in the mail, I was laid off over a year ago.
byu/NoAdhesiveness3384 inBig4

KPMG Appoints Maura Hodge to Lead US Sustainability Practice [ESG Today]
Professional services firm KPMG announced that it has appointed Maura Hodge to lead its US sustainability practice, taking over the role of US Sustainability Leader from Rob Fisher, who in turn has been appointed KPMG US Consulting Sector Leader for Financial Services and Insurance Hodge has been with KPMG for nearly 20 years, most recently serving as ESG Audit Leader, leading the firm’s national efforts around ESG measurement, reporting, and assurance.

Firm Watch

Energy equipment supplier Holtec files lawsuit against accounting firm CBIZ [Reuters]
U.S.-based energy equipment supplier Holtec International has filed a joint lawsuit with two other firms against accounting firm CBIZ and its senior executive Lonnie Davis, the company said on Thursday. The company also alleged business misconduct, including fraud, breach of contract and accounting malpractice, against CBIZ and two former Holtec executives, Chief Financial Officer Robert Galvin and General Counsel Andrew Ryan.

CliftonLarsonAllen to move Valley operations to Hayden Ferry Lakeside campus [Phoenix Business Journal]
A major accounting firm with national reach is moving its local operations to Tempe Town Lake. CliftonLarsonAllen, or CLA, announced Oct. 1 it is taking about 55,000 square feet at the Hayden Ferry Lakeside office campus in Tempe. CLA is expected to move into the building and operate a new “connection center” and office across multiple floors beginning in December 2025. That connection center is a dedicated space for employee learning and development, leadership training, collaboration, events and client meetings.

Deloitte once again named Tax Firm of the Year at the ITR Asia-Pacific Tax Awards 2024 [Deloitte]
The “once again” is a little sassy, no?
The International Tax Review (ITR) Asia-Pacific Tax Awards 2024* rankings were recently announced and Deloitte is extremely proud to announce that we have been named as the New Zealand Tax Firm of the Year for the second consecutive year. In the wider Asia-Pacific region, Deloitte was also the winner of:

• Tax Firm of the Year
• Transfer Pricing Firm of the Year
• Global Executive Mobility Tax Firm of the Year
• Indirect Tax Firm of the Year
• Tax Compliance and Reporting Firm of the Year
• Tax Innovator of the Year
• Tax Technology Provider of the Year

Baker Tilly Acquires Alirrium, Expanding Robotic Process Automation and AI Capabilities [Baker Tilly]
Effective Nov. 1, the move strengthens Baker Tilly’s capabilities in RPA, artificial intelligence (AI) and machine learning to better support businesses in modernizing their operations and improving their competitive edge. Alirrium is known for its expertise in intelligent RPA integration, serving a diverse client base that includes both government and commercial enterprises.

Citrin Cooperman Announces 2024 Partner Class [Citrin Cooperman]
Congrats to all nine of them. We mean that.
“I could not be prouder of this dynamic group of leaders,” said Citrin Cooperman Advisors LLC CEO Alan Badey. “They embody the best of Citrin Cooperman and have all demonstrated a deep commitment to the core values that drive our success. I am confident that their collective focus on strengthening our culture, providing outstanding client service, striving for professional excellence, and driving innovation will serve the Firm well in 2024 and beyond.”

BDO USA Announces New Principal Class [BDO]
BDO USA has promoted 56 professionals to principal, effective October 1.

Brown Plus Grows Firm by Welcoming Three New Team Members [PRWeb]
Wait, did they really put out a press release for this?
Martina Shea joined Brown Plus as an Outsourced Accounting Senior Associate with 20 years of accounting and office management experience. She has an Associate’s degree in Accounting from Harrisburg Area Community College. Martina is located at the Brown Plus office in Hanover, Pennsylvania.

Talent

City’s accounting firms see a slowdown in hiring amid industry-wide workforce shortage [Crain’s New York]
New York’s largest accounting firms’ growth may finally be leveling out; their headcounts increased by an average of just 6.8% in 2024, down from a 12% uptick last year and a 34% jump in 2022.

Is your firm hiring? If so, you’ll want to check out this week’s top remote accounting candidates from Accountingfly.

The post Friday Footnotes: Intuit Pisses Off Tax Practitioners; Deloitte Won’t Talk About Tax Dodging; Whatcha Up To, KPMG? | 10.4.24 appeared first on Going Concern.

When she left the Green Dot at the end of FY19, Engelbert made the transition to commissioner of the WNBA where she remains to this day, taking flak from fans for being too businesslike and speaking in PR. Those years of Deloitte training are really paying off for her. At the same time, the WNBA is stronger than ever with 2024 its most-watched regular season in 24 years, game attendance at 22-year highs, and merchandise sales up 601% from 2023.

With WNBA playoffs underway, Fortune decided to see what she’s up to and asked what her average day looks like.

8:30 a.m.: Engelbert arrives at the office, often a bit earlier than her colleagues. After spending the majority of her career in the corporate world, Engelbert says she had to adjust when she entered the sports industry.

“You got in really early when you were in the corporate world, you were trying to beat the traffic that commute and you had meetings, sports, because there’s so many games and so many things that night and weekends,” Engelbert said.

“My first day, I got in at 7:30, but no one else arrived until about nine,” she said. “Now I aim to get in around 8:30 or 9.”

Oh and she still practices SMOR, a recharging technique she learned in her public accounting days. “I learned this at Deloitte because when you’re running a firm of that size, you have to find time,” she told TIME in 2022. “We dubbed them smors. My EA used to put them on my calendar: Small moments of recovery. You need moments during the day.”

Yep, still taking those small moments of recovery and still under the same acronym.

12 p.m.: Engelbert adheres to a time-saving regime she refers to as “SMORE,” an acronym for “small moments of recovery.” She adds these to her calendar, seeing lunch as a networking opportunity or a chance to take a break and get outside.

“Usually over the lunch hour, I need to get out. If I’m working from home, I go for a walk and then have lunch when I get back,” she said.

Good reminder to all of us to go get a little sun on our cheeks in the middle of the work day. Especially now that daylight is quickly slipping away.

From Deloitte CEO to WNBA commissioner: Inside Cathy Engelbert’s daily routine [Fortune]

The post Five Years After Leaving Deloitte, Cathy Engelbert is Still the First Person in the Office in the Morning appeared first on Going Concern.

Today we announced that Gurbir S. Grewal, Director of the Division of Enforcement, will depart the agency, effective Oct. 11, 2024. https://t.co/4wXy6ka0qM pic.twitter.com/mnVf378bPi

— U.S. Securities and Exchange Commission (@SECGov) October 2, 2024

Sanjay Wadhwa, the Division’s Deputy Director, will serve as Acting Director, and Sam Waldon, the Division’s Chief Counsel, will serve as Acting Deputy Director. “I’m pleased that Sanjay Wadhwa has said yes to taking on the Acting Director role,” said SEC Chair Gary Gensler. “He has served as part of a remarkable leadership team, along with Gurbir, as Deputy Director and has been with the agency for more than two decades. He has shown strong leadership, is widely respected among his colleagues, and has provided invaluable counsel to the Commission. I’m pleased that Sanjay will be joined by Sam Waldon, currently Enforcement’s Chief Counsel, who is becoming Acting Deputy Director. Sam has provided sound advice to the Division and the Commission on critical legal issues.”

“While we have faced and overcome many challenges over the last three plus years, there has been one constant throughout: the public servants of the Enforcement Division stand ready to do everything they can to protect investors and market integrity. Their expertise, professionalism, and dedication are, indeed, unparalleled, and it has been the privilege of a lifetime to have been able to call them colleagues,” said Mr. Grewal in the press release. “From recalibrating penalties and remedies to confronting emerging risks to holding issuers, insiders, and gatekeepers accountable, I am incredibly proud of all that we’ve accomplished as a Division during my tenure. I am grateful to Chair Gensler not just for the opportunity to lead the Division, but also for his unwavering commitment to investor protection and support of a robust enforcement program.”

The verbal smackdowns Mr. Grewal consistently hands out to anyone running afoul of the SEC will be missed most of all. Truly a poet among regulators.

The post The SEC’s Silver-Tongued Enforcement Director Is Leaving appeared first on Going Concern.

The most recent incident was the second time SS numbers were stolen from CBIZ (that we know of), the first being last year’s MOVEiT breach that affected EY and PwC as well.

On September 19, a tiny little firm in Louisiana called Wright, Moore, DeHart, Dupuis & Hutchinson, LLC informed 127,431 people that their personal data including first and last name, Social Security number, driver’s license number, financial account number, passport number, and medical/treatment information may have been accessed by unauthorized explorers digging through their systems. The “what happened” section of the data breach notification doesn’t give many details, only that the firm noticed “unusual network activity” on or around July 11 of last year. The notification filed with the Maine Attorney General states the breach was discovered on September 10, 2024 but the firm said in the notification that an independent review into what data had been compromised was completed on July 18, 2024.

This is what they said:

On or around July 11, 2023, WMDDH became aware of unusual network activity and immediately took steps to secure our systems. We launched an investigation with the assistance of leading cybersecurity experts to determine what happened and whether sensitive or personal information may have been affected during the incident. As a result of the investigation, we identified that certain WMDDH data may have been acquired without authorization. WMDDH then engaged an independent team to conduct a comprehensive review of all potentially affected data, and on May 8, 2024, that review determined that your personal information may have been affected. WMDDH then worked diligently to identify contact information to effectuate notification and prepare the services being offered to affected individuals, as provided in more detail below. This process was completed on July 18, 2024.

Why does an accounting firm with 55 people working there (including partners and support staff) have Social Security numbers, driver’s license numbers, financial account numbers, passport numbers, and medical/treatment information data for nearly 130,000 people? It doesn’t say. But really makes you think about who has your data and what they’re doing to protect it.

Law firms are already promoting a potential class action suit.

Earlier:

The post A Firm With 55 People Finds Itself at the Center of a Data Breach Affecting 127,431 appeared first on Going Concern.

TLDR: Big D partners won this round by quite a bit.

Woe Be Unto PwC UK Partners

PwC UK partners pocketed £862,000 on average for the year ended June 30, 2024 — that works out to more than $1.14 million in freedom units. This is down from £906,000 in 2023 and way down from 2022’s record of £1 million, the latter having been boosted by the sale of PwC’s Global Mobility Tax and Immigration Services business. Total revenue at PwC UK was £6.3 billion ($8.4 billion USD) for 2024, heavily bolstered by 26% growth in the Middle East business while the UK business trudged along at 3% growth overall.

Revenue totals for PwC UK:

Now Let’s See Why They’re Called Big D

Deloitte didn’t have a spectacular year either yet its partners still took home an average of £1.01 million for the year ended May 31. Revenue results released this week show an increase of 2.4% to £5.7 billion ($7.6 billion USD). So they made less than PwC without a Middle East of their own to carry them and partner pay dropped by 5% but still beat PwC in partner take.

Consulting revenues contracted by 1% from £1.6 billion in FY23 to £1.58 billion in FY24 and Financial Advisory “faced a challenging market” to come out at £653 million in FY24 (down from £669m in FY23).

Deloitte didn’t whip up a snazzy autumnal-colored chart for their revenue results, just this screenshot of a table in what we assume is Word.

Since September of 2023, Deloitte has laid off nearly 1,000 people (that we’re aware of). Said the firm in their revenue announcement:

In response to a challenging market we had to take the difficult decision of making a number of targeted redundancies early in the year. However, we have continued to hire in areas of growth, with 3,387 new colleagues, including 2,150 graduates, apprentices and interns joining the firm. 6,800 of our 27,000 people were promoted this year – 80 of them to partner.

As of June 2024, the number of partners at Deloitte UK is 1,369, 30% of whom are women.

More:

• PwC UK partner pay falls to £862,000 as growth slows [FT]
• Deloitte UK partners pocket £1mn despite slowdown [FT]

The post Pissing Match of the Day: Deloitte vs. PwC Partner Pay appeared first on Going Concern.

FT says in a fresh story that 54-year-old rapper Jay-Z — real name Shawn Carter aka Mr. Bey — severed his relationship with BDO “following accusations that a staff member had been stealing money from customer accounts.” That former staff member is Vanessa Rodriquez, assistant to Andre N. Chammas who is a tax partner at BDO’s Miami office. Rodriquez was fired in July 2022, after which Fat Joe — real name Joseph Cartagena — noticed “some accounting irregularities” with his accounts. Wrote TMZ in 2022:

For starters, Joe says his wife Lorena’s name was used to open AMEX accounts and make huge unauthorized purchases, including $40K in charges for Uber rides and UberEats deliveries, as well as tuition payments for Rodriguez’s daughter.

Joe also claims he discovered one of his entities, Sneaker Addict Touring, was missing large deposits — to the tune of more than $300K. He says there were similar irregularities with other entities.

As for the Ponzi part of the alleged scheme — Joe claims the firm also defrauded Jose Iglesias of Colorado Rockies, Luis Garcia of the Houston Astros and former Chicago White Sox player Dayan Viciedo.

In the suit, he says AMEX accounts were opened under their names as well, and the money flowed between all of their accounts to keep the Ponzi going. The players are not plaintiffs in the suit, and Joe makes it clear he feels they were victims … just like himself.

Although the firm denied the allegations, BDO eventually leaned back and settled with Fat Joe. The terms were not disclosed.

Said FT:

Staff working for Jay-Z, whose real name is Shawn Carter, were angered by how BDO responded to the accusations of theft from Fat Joe, who is a client of Jay-Z’s entertainment company Roc Nation. They felt the accounting firm became overly defensive and failed to quickly provide Fat Joe with full access to his financial affairs, said people familiar with the matter and his 2022 lawsuit.
That anger led to Jay-Z’s departure as a BDO client in 2023, the people said, within months of Fat Joe leaving.

Fellow Roc Nation artist Megan Thee Stallion also dropped BDO. Their sources are a little late on this but it’s the first we’ve seen it reported. All three stars came to be BDO clients after the firm acquired Miami firm Morrison, Brown, Argiz & Farra in early 2021, at the time Florida’s largest accounting firm.

Here’s Fat Joe warning everybody not to trust accountants on a Breakfast Club Power 105.1 FM appearance in 2022:

Fat Joe’s lawsuit against BDO is embedded below for your reading pleasure.

The post Jay-Z Has 99 Problems But BDO Ain’t One appeared first on Going Concern.

FT wrote:

Richard Moriarty, chief executive of the Financial Reporting Council, wrote on Thursday to the bosses of the UK’s top accounting firms, saying the regulator was not “in principle” against private equity investment in the sector but there were “important risks that will need to be carefully managed”.

The intervention signals the regulator’s concerns that private equity investment could erode audit firms’ rigour and independence in auditing the accounts of large companies — key to maintaining investor confidence in the accuracy of companies’ accounts.

To be clear, the FRC isn’t wholly against private equity investment. “The FRC is not in principle against a greater participation of external private capital in the UK audit market.” said the letter dated September 26, embedded below in its entirety if you want to read the whole thing. “The FRC’s role is to protect the public interest and support growth. We are primarily concerned with outcomes and behaviors by audit firms such as delivering high quality audits, upholding high standards of ethical conduct, and fostering a culture towards always acting with the public interest in mind.”

“We recognize that access to external private capital could, in the right circumstances, have potential benefits for the UK audit market,” the FRC said. “However, there are important risks that will need to be carefully managed. As with any other major change within an audit firm that has the potential to affect its leadership and culture, a change in ownership structure via external private capital must be able to maintain and enhance over time the important public interest dimension of audit. It must also be able to protect independence as required by law and allow for any threats to that independence as a result of conflicts to be effectively safeguarded.”

On the expectation to rat themselves out, the FRC said that “a firm that is interested in, or considering, a change of ownership to introduce private capital should engage with the FRC (in addition to its Recognised Supervisory Body) at an early stage and with full candor, assured that all such discussions will be treated in strictest confidence.” In other words, the FRC wants firms to come to them well before any deal is struck. “We would also welcome engaging directly and in confidence with any investors considering entering or expanding into the UK audit market to help explain the regulatory framework and expectations,” they said.

Being the ignorant Americans that we are, we’re curious if the FRC can actually require firms to do this without official rulemaking or if this is them overreaching their authority under the banner of “we’re the regulator and we say so”? The letter does mention the public interest — both in fact and appearance — which certainly falls under the jurisdiction of the FRC. “Like for any other significant change relating to a UK firm, any party interested in a change of ownership by introducing external private capital must be able to continue to provide assurance that it will be able to support the public interest, the independence dimensions of audit and all applicable regulatory expectations,” the FRC said. “It is important to demonstrate that the legal requirements, including those pertaining to control, are met both in substance and in form.”

In the US, firms that have taken private equity investment have thus far dodged any independence concerns by forming two entities operating under one banner — the PE-backed one doing advisory and tax work, and a siloed assurance entity that’s independent from outside capital (in theory).

In its annual audit quality report issued last month, the FRC warned that private equity investors “may lack a deep understanding of audit practice objectives, and the public interest incentive to deliver audit quality. A lack of clarity or long-term thinking regarding PE exit strategies also raises concerns about maintaining audit quality and public interest motives over future years.”

The post Brit Audit Cops Want Firms to Snitch if Private Equity is Sniffing Around appeared first on Going Concern.

Hot Takes

Welcome the whip-crackers [Accounting Today]
Dan Hood has an, uh, interesting perspective on private equity’s influence in the accounting profession.
Providing the capital necessary to fund the retirement plans of the profession’s baby boomer and Gen X partners has been a major reason that accounting firms are turning to private equity — but that in itself will bring structural changes that make it easier to hold all members of the partner group accountable. That’s because PE doesn’t just bring the capital that accounting firms lack; it also brings a seriousness about goals and bottom lines and key performance indicators that accounting firms have often let slip in the interest of maintaining a collegial atmosphere. PE firms also bring more of a willingness to have those difficult conversations: Collegiality is nowhere near as much of a priority for them as profit.

Survey Says

Deloitte: 50% More Professionals Rank Data Privacy as a Top GenAI Concern in 2024 [TechRepublic]
Concerns over data privacy in relation to generative AI have surged, a new report from Deloitte has found. While last year only 22% of professionals ranked it among their top three concerns, this year the figure has risen to 72%. The next highest ethical GenAI concerns were transparency and data provenance, with 47% and 40% of professionals ranking them in their top three this year. Meanwhile, only 16% expressed concern over job displacement. Staff are becoming more curious about how AI technology operates, particularly with regards to the sensitive data. A September study by HackerOne found that nearly half of security professionals believe AI Is risky, with many seeing leaked training data as a threat. Similarly, 78% of business leaders ranked “safe and secure” as one of their top three ethical technology principles, marking a 37% increase from 2023, further demonstrating how the issue of security is top of mind.

Controllers prep for ‘dramatic’ role changes, focus on value creation: EY [CFO Dive]
Over the past decade, CFOs have seen their roles evolve from a purely numbers-focused position to one where they are expected to be a strategic driver for their organizations — and financial controllers are right behind them. Eighty-six percent of controllers believe their role will change “dramatically” by 2030, according to a report by Big Four firm Ernst & Young released Wednesday. While controllers recognize that change is coming, and coming quickly, they “don’t necessarily have a view on what that will look like,” Myles Corson, EY global and EY Americas strategy and markets leader, financial advisory services said. Indeed, 26% of controllers expect their roles will require completely different, or “unknown” skills by the end of the decade, EY’s Inaugural DNA of the Financial Controller report found — meaning both finance chiefs and controllers must prep for a coming future where their roles look very different than they do in present-day.

Talent

Hey employers, are you looking to hire accountants to fill remote or hybrid roles? Accountingfly has some right here! Check out this week’s top remote accounting candidates and sign up for Always-On Recruiting to get a fresh batch in your inbox every week. It’s free!

Audit

PCAOB Sanctions Five Audit Firms for Violations Related to Audit Committee Communications or Reporting Requirements [PCAOB]
The PCAOB imposes censures, $165,000 in total fines, and remedial undertakings that include training and improvement of policies and procedures. Four sanctioned firms failed to make certain required communications with audit committees, as required by AS 1301, Communications with Audit Committees, and/or Rule 3524, Audit Committee Pre-approval of Certain Tax Services. The firms are the following:  Accell Audit & Compliance, P.A. (PDF) – $40,000 civil money penalty and censure; Crowe MacKay LLP (PDF) (Canada) – $30,000 civil money penalty and censure; Ernst & Young AG (PDF) (Switzerland) – $45,000 civil money penalty and censure; Grant Thornton LLP (PDF) (Canada) – $30,000 civil money penalty and censure. Two of these firms, Crowe MacKay LLP and Grant Thornton LLP, also failed to document audit committee pre-approval of certain services, in violation of AS 1215, Audit Documentation. In addition, Accell Audit & Compliance, P.A. failed to communicate in writing all material weaknesses to an issuer’s audit committee, in violation of AS 1305, Communications About Control Deficiencies in an Audit of Financial Statements.

Auditor Proud Day hits decade of international recognition [Accountants Daily]
Auditor Proud Day lands on the last Thursday of every September and is aimed at attracting more people to the profession and celebrating those already working within it. The day is a CA ANZ-led annual social media movement around the world which attracts all peak accounting bodies to celebrate the audit profession.

Cruising the #AuditorProud hashtag, it looks like everyone else forgot about it too. Not these guys though.

Happy #AuditorProud day! Today is about celebrating our #audit teams worldwide who ensure transparency, trust and accountability in today’s financial landscape. Thank you for your commitment and excellence! We are always looking for our #NextGenAuditors: https://t.co/Ps7of7fCQq pic.twitter.com/or2hfiyi4s

— Forvis Mazars Group (@ForvisMazarsGrp) September 26, 2024

Happy Auditor Proud Day! Celebrating our advisors who champion transparency and trust. Thank you for your dedication to excellence! #AuditorProud #AuditorProudDay #Audit #Accounting pic.twitter.com/B2MHhrc01C

— Grassi (@GrassiAdvisors) September 26, 2024

Firm Watch

Deloitte Named ESG Firm of the Year at International Tax Review 2024 Americas Tax Awards [PR Newswire]
Deloitte announced today that it has received four awards at the 2024 International Tax Review (ITR) Americas Tax Awards, honoring its accomplishments delivering market-leading services and solutions. Deloitte was named “ESG Firm of the Year” and “Diversity Equity & Inclusion Firm of the Year,” becoming the first winner of the ESG award category in its inaugural year recognized by ITR. Additionally, Deloitte was named “Tax Technology Firm of the Year” in the Americas region for the seventh consecutive year, as well as “Tax Innovator of the Year” for the fourth consecutive year.

Katz Nannis & Solomon Accounting Firm Sued Over 2023 Data Breach [Bloomberg Law]
Massachusetts-based accounting firm Katz Nannis & Solomon PC failed to protect the personal information of thousands of people that was exposed in a November 2023 data breach, three proposed federal class actions said. Bertha Godbee, Phenicia Brown, and Delores J. Williams alleged in separate lawsuits that KNS breached its duties under common law, contract law, industry standards, and the Federal Trade Commission Act to implement reasonable and adequate measures to protect sensitive data as well as failed to provide accurate and prompt notice of the breach.

PKF O’Connor Davies Welcomes Donald Melody as Partner [PRWeb]
Melody joins the organization’s Public Company and Financial Services practice areas with over two decades of experience conducting and supporting audits and providing consulting advice to broker-dealers, including prior service as a Branch Chief with the Securities and Exchange Commission (SEC) and an Inspections Leader for the Public Company Accounting Oversight Board (PCAOB). “Don’s career spans the auditing spectrum, and his multifaceted background has equipped him with an invaluable and in-depth understanding of the complexities involved with ensuring compliance for organizations of all types,” said Clare Cella, Managing Partner of PKF O’Connor Davies LLP. “In particular, his time with the SEC and PCAOB has afforded him an insider’s perspective into the evolving regulatory landscape that will benefit our clients and our team immensely.”

Barnes Dennig, one of Cincinnati’s largest accounting firms, merges with Indianapolis company [Cincinnati Business Journal]
One of Greater Cincinnati’s largest accounting firms is getting bigger. Downtown-based Barnes Dennig has finalized a transaction to merge an Indianapolis CPA firm into its operations. The deal that will combine Barnes Dennig with Greenwalt CPAs is due to be completed Jan. 1, 2025. “This is a very big deal for us,” Jay Rammes, Barnes Dennig managing director, told me. “It’s quadrupling our presence in that marketplace. You have to be a certain size in a market to build a brand and attract talent. We wanted to get some critical mass there.”

Technology

Building an AI-ready firm: Strategies for responsible integration and growth [Thomson Reuters]
As evidenced in the 2024 State of the Tax Professionals Report, recruiting and retaining new professionals is a top priority given the shortage of tax and accounting talent and a shrinking labor pool. That’s why many accounting firms are now directing more of their energies toward hiring, training, and engaging high-performing staff, as well as cultivating an AI-savvy work culture. Not only is culture important, but AI must align with your accounting firm’s business goals. AI should not be adopted for its own sake but with clear objectives like improving efficiency, enhancing client service, and driving growth.

Accountants Behaving Badly

Marshall woman accused of bilking family company and spending money at casino [Minnesota Star Tribune]
The former accountant of a family construction company skimmed more than $95,000 from the business and spent it on gift cards, a Spotify subscription and trips to casinos among other things, county prosecutors said. Rikki Lee Kor, 49, of Marshall was charged with 24 felony counts of fraud in connection with the alleged embezzling that spanned about a year until this summer.

Education

UVM $15M Gift from Grossman Family Foundation to Launch Undergraduate Business Co-op Program [University of Vermont]
A $15-million gift to the University of Vermont’s (UVM) Grossman School of Business will create the university’s largest experiential Co-op program, providing students with real-world experiences working in leading companies to better prepare UVM Catamounts for impactful careers and leadership in business and entrepreneurship. The new undergraduate Co-op program will enhance experiential opportunities for students in the school’s four concentrations (accounting, finance, marketing, business analytics) and themes (entrepreneurship, sustainable business, and global business). More immersive than a typical internship, a Co-op is a rigorous academic experience through which students alternate between classroom education and full-time employment, gaining practical, hands-on experience in their field of study as part of their undergraduate degree. Working in a partner company for a full semester, students apply their classroom knowledge to meaningful, real-world business situations.

The post Friday Footnotes: Private Equity DGAF; Controllers Reflect on Their Future Skill Set; PCAOB Does Something | 9.27.24 appeared first on Going Concern.

According to The Real Deal, Weaver (#31 IPA 100, $328,276,610 in revenue) is taking 36,500 square feet at the Penn 1 building in Midtown. The move comes after they merged with Buchbinder Tunick & Company who already had 8,000 square feet at the tower. A source tells TRD asking rent for the entire 28th floor was $105 per square foot and the lease duration is 11 years.

Side note: we had no idea Weaver’s website was so pretty. Props to their web developer.

Says Penn 1 owner Vornado Realty Trust of the building:

Punctuating the Manhattan skyline, PENN 1 is a Class-A, 55-story tower of over 2.5 million square feet, providing breathtaking 360-degree views of the entire city and direct access to Penn Station and Moynihan Train Hall.

PENN 1 has undergone a major transformation with a focus on providing a first-class hospitality experience to its tenants. The result of this redevelopment is a sleek, modern building that seamlessly blends state-of-the-art technology with luxurious amenities to create an unparalleled tenant experience.

Weaver MP John Mackel told TRD the proximity to Penn Station was a big draw. “At Weaver, we are dedicated to our people-centric culture that puts our team members in the best position to collaborate, innovate and serve our clients well,” he said in a news release. “The redeveloped PENN 1, which sits atop North America’s most accessible transit hub and features unparalleled in-building and neighborhood amenities, proved to be an ideal spot to consolidate our New York City team.”

And they have on-site pickleball courts!

The post Weaver’s Upgrading to a Whole Floor in NYC appeared first on Going Concern.

That IRS press release, for your reading pleasure:

IRS moves forward with Employee Retention Credit claims: Agency accelerates work on complex credit as more payments move into processing; vigilance, monitoring continues on potentially improper claims

The ERC program began as an effort to help businesses during the pandemic, but as time went on the program increasingly became the target of aggressive marketing – and potentially predatory in some cases – well after the pandemic ended. Some promoter groups called the credit by another name, such as a grant, business stimulus payment, government relief or other names besides ERC or the Employee Retention Tax Credit (ERTC).

To counter the flood of claims, the IRS announced last fall a moratorium on processing claims submitted after Sept. 14, 2023, to give the agency time to digitize information on the large study group of ERC claims, which are made on amended paper tax returns. The subsequent analysis of the results during this period helped the IRS evaluate next steps, providing the agency valuable information to improve the accuracy of ERC claims processing going forward.

The detailed review during the moratorium allowed the IRS to move into this new stage of the program with more payments and disallowances. In addition, the IRS will remain in close contact with the tax professional community to help navigate through the complex landscape.

While this might be good news for the few business owners who’ve been waiting a long time for their legitimate ERC claims to go through, apparently some senators weren’t so happy to hear this.

U.S. Senators Mitt Romney (R-UT), Thom Tillis (R-NC), and Joe Manchin (I-WV) said on September 19 they’ve introduced the Employee Retention Tax Credit Repeal Act, bipartisan legislation that would disallow the processing of Employee Retention Tax Credit (ERTC) claims filed after January 31, 2024 and increase penalties on fraud.

In the IRS’ own words, ERC has been rife with fraud and abuse, hence the moratorium they placed on processing of new ERC claims last year. Employee Retention Credits made the yearly Dirty Dozen list of tax scams two years in a row.

Said the senators in their news release:

The ERTC has been highly susceptible to fraudulent schemes—costing taxpayers nearly 200% more than anticipated and adding an estimated $230 billion to the national debt through Fiscal Year 2023. By eliminating the ERTC, the senators’ bill would save taxpayers an estimated $79 billion over 10 years.

“In a rare moment of widespread agreement in Washington, almost all members of Congress agree that we should eliminate the ERTC—which has been pervaded by fraud and cost nearly 200% more than originally projected,” said Senator Romney. “Stealing from the government is stealing from hardworking taxpayers. Instead of repurposing ERTC funds for future spending programs, we should eliminate this plagued credit now to lower our national debt.”

“Repealing the ERTC is a critical step towards addressing America’s debt crisis,” said Senator Tillis. “It’s past time to eliminate this fraud-ridden pandemic-era policy so we can concentrate on getting our fiscal house in order.”

Estimates suggest the ERC credit has added $230 billion to the deficit through FY2023 and could eventually cost up to $550 billion.

“Congress established the ERTC during the onset of the COVID-19 pandemic to encourage businesses to retain employees during such unprecedented circumstances. As President Biden formally ended the COVID-19 Public Health Emergency in May 2023, it’s time for the IRS to move on, too. I’m proud to join the bipartisan ERTC Repeal Act, which would end the ERTC for claims submitted after January 31, 2024—cutting down on the staggering and unexpected costs of this program—and would enhance anti-fraud measures for claims still being processed,” said Senator Manchin.

Over the summer, the IRS The IRS spent months digitizing information and analyzing data for more than one million ERC backlogged claims, the total of which was more than $86 billion. Through this analysis, the agency determined 10-20% of claims were low-risk, 60-70% of claims had unacceptable risk, and 10-20% had high risk. Meaning only about 10-20% of these million ERC claims were most likely legitimate and met the requirements to claim the credit.

As of August, he IRS has sent out 28,000 disallowance letters to businesses whose claims showed a high risk of being incorrect, disallowances that will prevent up to $5 billion in improper payments according to IRS estimates. Thousands of audits are underway, and 460 criminal cases have been initiated. The IRS has moved 50,000 low-risk ERC claims into the pipeline for payment processing in coming weeks.

Text of the Employee Retention Tax Credit Repeal Act can be found here [PDF].

Romney, Tillis, Manchin Introduce Bipartisan Legislation to Repeal COVID-Era Tax Credit Riddled with Fraud [Senator Mitt Romney]

The post Senators Want to Nuke the ‘Fraud-Ridden’ Employee Retention Credit For Good appeared first on Going Concern.

SecurityWeek reports:

The hacker known as IntelBroker announced late last week on the BreachForums cybercrime forum the availability of “internal communications” obtained from Deloitte, specifically an internet-exposed Apache Solr server that was accessible with default credentials.

The hacker claims the stolen data includes email addresses, communications between intranet users, and internal settings.

The data is available for download to the hacking forum’s active users or those who have purchased credits.

Cyber Security News has a screenshot of the forum post, a forum we won’t be visiting tyvm.

According to CSN, the compromised data includes email addresses and communications between intranet users, among other things. Deloitte told SecurityWeek an internal investigation “has found no threat to client data or other sensitive data related to this incident.”

A quick search of our archive reveals a few prior hacking incidents for Deloitte:

• Deloitte Tries To Play It Cool After Cyberattack
• Sony Hack Also Leaked Deloitte Salaries, Reveals Gender Gap*

The latter incident wasn’t Deloitte’s fault, to be fair. Sony got breached hard in 2014 and an ex-Deloitte employee who worked for Sony HR at the time just happened to have a spreadsheet with the 2005 salaries of 31,124 Deloitte employees. The sheet also contained race and gender data.

Just going to leave this here for Deloitte to pursue at their leisure.

The post Hackers Say They Got Their Hands on Deloitte Intranet Communications appeared first on Going Concern.

Giuliani did not in fact give his immediate attention to the matter and the demand letters continued for five years at which point the firm decided to take him to court for just $10,000. The total bill was $50,833 of which Giuliani owed $36,125 so it was a third of what they were owed but something is better than nothing we suppose. $10,000 is peanuts compared to his next attempt at avoiding a firm’s bill.

In an unexpected development, Giuliani told bankruptcy court in May that he was unable to find an accounting firm willing to work with him on his case. Wrote The Guardian:

“Nobody seems interested” in helping Rudy Giuliani meet accounting obligations in his ongoing bankruptcy case, lawyers for the former New York mayor, presidential hopeful and Trump attorney said in a court filing on Tuesday.

“Unfortunately, the debtor originally had an accountant who was helping,” the filing said. “However, he had a change of heart and indicated that he no longer wished to help prepare the monthly operating reports.

“The debtor advised that he has reached out to a number of accounting firms and CPAs seeking their help, however, no one seems interested in taking the assignment.”

Gee, can’t imagine why.

He did find someone to help with the bankruptcy accounting eventually, a firm called Global Data Risk. Says GDR on their website of their expertise and the weapons in their robust toolkit:

Independance [sic], Objectivity and Efficiency.

Global Data Risk (GDR), is a premier financial advisor to bankruptcy committees, trustees, and other stakeholders navigating the intricate landscape of financial restructuring and asset recovery. Our expertise is in managing the complexities of asset tracing and value recovery across both the United States and foreign jurisdictions including emerging markets where the rules based order is uncertain. We tackle some of the most high-profile and challenging cases with precision and authority.

GDR distinguishes itself in the industry through a unique approach that combines the diverse skills and extensive experience of our multidisciplinary team. Our team comprises forensic accountants, business experts, complex financial instrument managers, bankers, lawyers, investigators, technologists, and former intelligence officers. This blend of expertise allows us to offer exceptional guidance and support in a variety of critical areas including restructuring, debtor issues, hard asset tracing, and the increasingly important domain of crypto and emerging technology asset tracing.

Surely those services come cheap.

You’ll never guess what happened next! Global Data Risk demanded $324,843.75 for 1,181.25 hours of services — love the 15 minute increment, guys — plus $6,854.29 in expenses for a total of $331,698.04. And they did this in court in August because, guess what, America’s mayor hadn’t paid.

“Even after dismissal of his bankruptcy case, the Debtor has launched another baseless and bad faith crusade in this Court, this time in opposition to GDR’s Application for final fees and expenses,” said GDR in a court filing. “It is disappointing, but unsurprising, given the tenor of the case prior to dismissal: after seven and a half months in bankruptcy—all of which were characterized by the Debtor’s delay, obfuscation and attempts to reap the rewards of bankruptcy without adhering to its burdens—the Debtor abruptly reversed course and obtained dismissal of his chapter 11 case in the name of avoiding the looming potential appointment of a chapter 11 trustee.”

“As has been repeated by the case parties ad nauseum, the Debtor chose to file for chapter 11, and he consequently must bear the burdens of what such a filing entailed.”

In August, Giuliani requested the bankruptcy court reduce the GDR bill by almost half, saying he was overbilled and accusing the company of “duplicative time entries” and other excessive billing. GDR claimed Giuliani had received “an incredible deal.” You all can do the math on 1,181.25 hours of billable work for a cost of $324,843.75.

The court wasn’t buying it and this week Judge Sean Lane, United States Bankruptcy Judge for the Southern District of New York, handed GDR a win.

CNN:

Former New York City Mayor and Donald Trump lawyer Rudy Giuliani has been told he must pay a bill of about $300,000 for a forensic accounting firm’s work to trace his money in his now-aborted bankruptcy proceeding.

The dispute over how much Giuliani owes to the accounting firm Global Data Risk was the last vestige of his efforts earlier this year to hold off creditors, to whom he is nearly $150 million in debt.

Giuliani had argued to the judge, Sean Lane of the U.S. Bankruptcy Court in White Plains, New York, that the fees of the accounting firm such as billing for meetings, travel and interview time as they researched his assets for the creditors should be reduced.

But Lane is giving the accounting firm nearly all it sought.

“There was an alarming and inappropriate lack of financial transparency by the debtor … which led to the need for this work,” Lane said at a court hearing on Tuesday.

Giuliani’s bankruptcy case was dismissed in July. Best of luck to GDR on extracting that blood from this particular turnip.

The post Rudy Giuliani Tried Really Hard to Stiff a Firm for Forensic Services Rendered appeared first on Going Concern.

While we await EY revenue numbers that should drop some time next month, sources inside EY are running to The Times to say partners are being warned of a second year of pay cuts ahead.

Partner pay at EY is set to fall for the second year in a row while senior staff will forgo a pay rise, in a sign that professional services firms are still battling a downturn.

Benoit Laclau, the firm’s managing partner who runs the consulting division for UK and Ireland, told senior managers and directors on a call last week that average partner pay would be down this year, according to EY sources.

But we already knew the partners have been warned, stories about it came out back in April. Prior to the end of EY’s fiscal year on June 30, EY UK & Ireland Managing Partner, Finance and Transformation, Stuart Gregory gave a presentation to the partners letting them know partner profit could drop as much as 15 percent this year. Based on prior year partner payouts, a 15 percent drop would be somewhere in the neighborhood of £646k ($865k USD), putting them only slightly above 2020’s low of £667k.

2023 was the first time EY UK partner profits had taken a hit since all that stuff happened with a certain virus we don’t talk about anymore. Partner pay at EY UK so far for this decade:

• 2024: ?
• 2023: £761,000
• 2022: £803,000
• 2021: £749,000
• 2020: £667,000
• 2019: £679,000

Earlier this month it was reported that many service lines at EY UK received pay cuts for raises this year.

The post EY UK Partners Warned Again Pay Will Suck This Year appeared first on Going Concern.

This bit though:

83 percent of the 1,345 CEOs surveyed expect a full return to office over the next three years, up from 64 percent in 2023. That number increases to 87 percent for CEOs in the 60-69 age group because boomers are actually the worst.

Male CEOs are more gung ho (the spellcheck wants to correct this to “bunghole” and honestly…) on a full return to office compared to their female counterparts: 84 percent of them expect a full return to office within three years while 78 percent of female CEOs feel the same.

Guess the era of the employees having all the power is gone, or at least that’s what CEOs think. Was nice while it lasted.

The post CEOs Surveyed By KPMG Feel a Full Return to Office is Imminent appeared first on Going Concern.

Big 4

Big Four Accounting Firms Ebb as Feeder for Corporate CFO Jobs [Bloomberg Tax]
Long-term recruiting trends show top accounting and consulting firms are slipping as a dominant contributor to the talent pipeline for chief financial officers at big publicly traded companies, though they remain a common launching point. About one-quarter of CFOs at large US-listed companies in the S&P 500 index bring past work experience at PricewaterhouseCoopers and its Big Four firm peers Ernst & Young, Deloitte, and KPMG. Add in other common firms where CFOs have previously worked—such as McKinsey & Co. and Boston Consulting Group—and that figure rises to one-third with an accounting or consulting background. That’s according to an analysis of Bloomberg data on company management profiles, LinkedIn profiles, and corporate leadership biographies.

Earlier: Mother Pens Letter Calling Out EY After Her Overworked Daughter Suddenly Passed Away at 26

Deloitte Forms Committee To Review Employee Practices Amid EY Work Pressure Controversy [NDTV]
Amid a social media storm over the death of a young employee at tax consultancy major EY allegedly due to work pressure, Deloitte has formed a three-member external committee, which includes former revenue secretary Tarun Bajaj, to look into practices, policies and processes concerning employees, its South Asia CEO Romal Shetty said on Friday. Shetty said to manage the work pressure within the organization.

LSBF, Deloitte to create upskilling programmes [International Accounting Bulletin]
The London School of Business and Finance (LSBF) Singapore Campus has partnered with Deloitte to co-develop a suite of upskilling programmes for junior to mid-level professionals in the finance and accounting sectors.

Take a risk? CFOs say now is not a good time [Axios]
Here’s a stunning stat: Only 12% of chief financial officers say that now is a good time to take greater risks, according to a Deloitte survey out Wednesday morning. Why it matters: This could be an indicator of an economic slowdown to come.

PwC looks for way forward in increasingly difficult China terrain [Bamboo Works]
The PwC case also shows how multinationals are coming increasingly under the microscope on government concerns about their potential to pose national security risks amid growing tensions between China and the U.S. Auditing is especially sensitive since it involves access to extensive market data that Beijing worries could be leaked to foreign governments. To avoid that, it has been urging state-owned enterprises to switch to local auditors from foreign ones like PwC. In this regulatory climate, foreign businesses wishing to stay in China have no choice but to walk a tightrope between keeping both their clients and the government happy. And as the Evergrande case shows, sometimes it’s not easy to do both. That can be problematic for the broader China business of a company like PwC, whose other clients have been jumping ship over concerns about the company’s future.

Talent

Are you struggling to find remote accountants, CAS experts, auditors, or tax professionals for your firm or internal team? Accountingfly can help! With Always-On Recruiting, employers can access a pool of top remote accounting candidates without any upfront costs. Sign up now to see the complete candidate list and connect with potential hires. Here are this week’s top remote accounting candidates for your browsing pleasure:

News

Cybersecurity firm flags attack on construction accounting system [Construction Dive]
Ellicott City, Maryland-based cybersecurity firm Huntress has discovered an emerging threat for users of Foundation Software, which bills itself as serving 43,000 construction professionals nationwide. In a Sept. 17 report, Huntress said plumbing, HVAC, concrete and similar subcontractors were actively impacted.
And the company response:
The impacted clients did not follow the protocol of changing their user ID and password, said Mike Ode, Foundation’s CEO, who noted the firm hosts the vast majority of its customers via its software-as-a-service offering. “If you buy a software and you install it at your place, you are responsible for the security and the walls and the perimeter, right?” Ode told Construction Dive. “We’re responsible for what we’ve been selling for the last decade, and that’s a hosted solution.” He urged impacted firms to adopt hosted software instead. “We want everybody in our SaaS-hosted environment, right? Let us do it. Let us take on the responsibility,” Ode said. He asserted the attack mentioned in the report may have impacted just a single client, but acknowledged he didn’t know for certain.

Low bidders bypassed for state contract to probe mystery $1.8B [The Nerve]
A global consulting firm hired by the state [of South Carolina] to investigate the mystery $1.8 billion and related financial questions was not the low bidder for the “potential” $3 million contract, records obtained by The Nerve show. But under state law, procurement officials don’t have to accept the lowest bid but instead can use other purchasing procedures depending on the situation, including issuing a “request for proposals,” which was done by the S.C. Department of Administration in awarding a contract in July to New York-based AlixPartners in connection with the investigation of the $1.8 billion.

People

Ernst & Young names new Denver chief [Denver Business Journal]
The accounting and professional services giant said Andrea Lovelady will take over as Denver office managing partner beginning Oct. 1. Mark Belfance, who held the position since 2016, will retire this year, the company said.

Grant Thornton’s Jessica Knott named one of the Most Influential Women in Business by the San Francisco Business Times [Business Wire]
Jessica Knott, an Audit & Assurance partner at Grant Thornton, has been named one of San Francisco’s “Most Influential Women in Business” by the San Francisco Business Times. Each year, the publication recognizes leaders in the Bay Area for their impact on their industry and the community. “She builds genuine relationships with her clients and colleagues, and her unrivaled tech industry knowledge has allowed her to guide dozens of clients through each evolution of that sector.” Knott is the third consecutive woman from Grant Thornton to receive this award. Melanie Krygier, Grant Thornton’s Private Equity Tax leader, was recognized in 2023; and Rimma Tabakh, Grant Thornton’s market managing principal in San Francisco, received the accolade in 2022.

AI

AI, the infinite intern [Accountancy Today]
So, for the tax and accounting industry, what is the best lens to view genAI through in its current stage? I think it would be helpful for most organisations to think of it as the ‘infinite intern’ – i.e. a round-the-clock resource that is happy to do anything thrown its way, at scale, and has the ability to turn around jobs extremely quickly albeit being prone to frequent errors and therefore requiring close monitoring. When genAI is approached with this mindset, the tasks it is best suited to start to become much more apparent. For instance, while it shouldn’t necessarily be trusted with one-off, high value tasks, it excels at automating routine tasks and reconciling large amounts of data that would otherwise take many hours or even days to get through. Doing so not only slashes the time taken to complete such tasks, but it also frees up tax professionals to focus on strategic activities that are much more valuable to the organisation as a whole.

Live Broadcast: AI and automation in the accounting industry [Accountancy Age]
Tim Baker, CEO of Kloo, and Sean Smith, Accountant Evangelist at Sage, explore the transformative power of AI and automation.

Nisivoccia on AI’s Role in the Changing Landscape of Accounting [New Jersey Business & Industry Association]
On this past weekend’s Minding Your Business on News 12+, Nisivoccia Principal of Client Accounting Services Vicki Kosuda joined host Bob Considine to discuss the upswing of Artificial Intelligence in accounting, and how AI can help improve cash flow planning management for all businesses. Kosuda explained that AI’s ability to rapidly process data will change the nature of how accountants serve their clients. “It’s really going to help the client versus the entering the data, figuring out what happened before, what happened now, compiling the data, to then have those important conversations,” she said.

CFOs juggle strategy, economic pressures in AI push: Billtrust [CFO Dive]
While businesses have rapidly adopted new technologies to improve their customer-facing products and services, back-of-house functions — such as finance — have lagged behind the digitization curve. However, with finance teams under growing pressure to deliver more strategic insights faster, today’s finance chiefs are taking a second look at how they can bring new technologies such as artificial intelligence into spaces like their order-to-cash processes. With finance asked to improve its efficiency, optimize their processes and improve key metrics such as sales outstanding and customer defaults, CFOs recognize “they’re not going to get there by telling people to work harder or throwing more people at it,” Sunil Rajasekar, CEO of accounting software provider Billtrust, said in an interview. “They recognize with the pressures of today, they have to digitize.”

AI driven accounting will replace monthly close by 2030, says research [Verdict]
New research commissioned by global accounting software platform Sage predicts that, by 2030, three quarters of businesses will abandon the accounting practice of the traditional monthly close in preference to AI driven real-time accounting. The research found that 98% of respondents anticipate that AI will improve monthly close accounting efficiency in the next five years, and 54% anticipate an efficiency boost of 20% or more. Some 53% of respondents agreed or strongly agreed that AI would allow them to completely abandon accounting to a monthly close schedule.

Scammers Using AI to Clone Voices, Drain Bank Accounts As Deloitte Forecasts $30,000,000,000 in AI Losses by 2027 [The Daily Hodl]
Cybersecurity expert Thomas Hyslip, who spent two decades in federal law enforcement with the Secret Service and the Department of Defense, says it takes a matter of seconds to create impostor audio. “Historically they had to manually go out and steal credit cards… Now with AI they can take what they already have and use that to enhance their ability to commit fraud… Some of them, you can do [in] as many as 30 seconds. You can clone somebody’s voice and then make phone calls or, you know, use it to try to trick voice recognition. Some of the banks now use voice recognition in place of the phone number.” Big Four accounting firm Deloitte says its base case forecast finds fraud from generative AI will reach $30 billion by 2027, rising from $12.3 billion in 2023.

Meanwhile, in Law

Women Law Professors, Students Across The Country Continue To Receive Creepy Texts From Unidentified 2L [Above the Law]
Back in January, female professors at law schools across the country started receiving strange text messages from an unidentified source who claimed that “law school isn’t fair for us men anymore” because “women always outperform us now.” The next month, as the unsettling messages continued, lamenting how “unfair” it is that “women have clearly won the battle of the sexes,” leaving men as “the losers,” the FBI reportedly began an investigation into the matter. Now, nearly nine months later, the odd text messages are still ongoing, and it’s not just law professors who are receiving them — female law students are, too.

The post Friday Footnotes: Big 4 Isn’t CFO Kindergarten Anymore; Grant Thornton Influences Something; “Completely Brainwashed Slaves” | 9.20.24 appeared first on Going Concern.

There are a large amount of layoffs going on at RSM, specifically in the D365 practices, Risk Cyber Security, and MC (management consulting practices). Meetings were scheduled yesterday via Webex, not MS Teams, which is interesting as the firm uses MS Teams for all communications. Meetings are all day today across these groups.

And followed up later in the day with specifics:

Updates after the meetings today, so far, over 200 staff let go in Audit, 260 let go across consulting, mainly D365 & Dynamics teams, Risk Consulting and Management Consulting.

Webex? Really? What year is this?

Just going to drop this completely unrelated post from July here: Within Three Years, RSM US Will Have Twice as Many People Working for Them in India

Anyone with more info or in need of a virtual shoulder to cry on is welcome to email or text.

The post Layoff Watch ’24: It’s Not TGIF at RSM Today appeared first on Going Concern.

According to INSIDE Public Accounting, ATA will retain majority control and no leadership shakeups are expected. “Through its partnership with Copley Equity, ATA will enhance its talent, technology and internal operations as well as continue its long-term plan of exploring strategic acquisition and growth opportunities,” IPA said. According to ATA’s website, the firm has 25+ partners and 200+ staff in multiple offices across Tennessee, Kentucky, Arkansas, and Mississippi.

“In planning for our future, ATA sought a capital partner who could help the company expand our service offerings, grow into additional markets, and continue to improve our tools and people resources. We are very excited to partner with Copley Equity, which brings a strong track record of supporting the growth of the companies with whom they partner,” said John Whybrew, ATA managing partner at ATA since 2016.

“Combining deep technical expertise with strong community relationships, clients choose to work with ATA year after year,” said Peter Trovato, managing director of Copley Equity. “These attributes have made ATA a leading growth platform in the attractive accounting services market. We are excited to support ATA as it continues to recruit top talent, invests in technology solutions, expands into new geographies and broadens its service offerings.”

“Our investment in ATA is the culmination of a multi-year search for a partner in the accounting services space,” said Sean Sullivan, vice president at Copley Equity. “Among the hundreds of opportunities we reviewed during that process, ATA was a clear standout. We look forward to working with ATA across a range of strategic initiatives in the coming years.”

Copley Equity says it takes an “industry agnostic” approach and focuses on lower middle market companies. Specifically:

• Private companies generating $2 to $25 million in earnings or free-cash flow
• Typically founder owned and operated with strong management
• A stable revenue base often with recurring characteristics

Terms of the deal weren’t disclosed but Copley says on their website they invest $5 to $75 million in equity per transaction so we assume it’s somewhere in that large window. They’ll throw the right company some money for growth capital, owner liquidity, acquisition financing, or debt retirement. It appears this is the first accounting firm in their portfolio.

“Our unique capital base allows us to invest in companies that do not fit the venture capital template and are typically ‘too small’ for traditional middle-market private equity firms,” says the 12-year-old private equity firm. Pitchbook profile here should anyone care to do a deeper dive.

The post A Sub-$41 Million Firm We’ve Never Heard of Has Let Private Equity In appeared first on Going Concern.

“When Anna joined this specific team, she was told that many employees had resigned due to the excessive workload, and the team manager told to her, ‘Anna, you must stick around and change everyone’s opinion about our team.’ My child didn’t realize she would pay for that with her life,” the email said.

A tweet by @kaay_rao — which is where we first saw the letter shared yesterday — has 3.2 million views as of publication time.

Heartbreaking news from EY Pune – a young CA succumbed to the work pressure and nobody from EY even attended her funeral – this is so appalling and nasty!!! pic.twitter.com/pt8ThUKiNR

— Malavika Rao (@kaay_rao) September 17, 2024

Social media reaction and media coverage since the letter dropped yesterday has pushed EY India into issuing a statement. “Anna was a part of the Audit team at S R Batliboi, a member firm of EY Global, in Pune for a brief period of four months, joining the firm on 18 March 2024. That her promising career was cut short in this tragic manner is an irreparable loss for all of us,” EY’s statement said [source: Economic Times]. She passed away on July 20.

“We are taking the family’s correspondence with the utmost seriousness and humility. We place the highest importance on the well-being of all employees and will continue to find ways to improve and provide a healthy workplace for our 100,000 people across EY member firms in India,” they said.

The statement, brusque and hollow even by corporatespeak standards, is not being well-received by the public so far.

EY’s response is a classic lesson on how to say nothing will change without saying nothing will change. pic.twitter.com/HuHIDScGLf

— Lavanya Mohan (@lavsmohan) September 18, 2024

More conversation in @kaay_rao’s replies.

Earlier: Mother Pens Letter Calling Out EY After Her Overworked Daughter Suddenly Passed Away at 26

The post EY Responds to the Viral Letter From Bereaved Mother of a Deceased Auditor, Social Media Calls BS appeared first on Going Concern.

Meanwhile, EY China put out this press release:

EY Greater China Region (EY) joins hands with Yan Chai Hospital and Share for Good for joint charitable initiatives. A group of 25 volunteers took part in visiting and distributing mooncakes, sharing holiday blessings and warmth with more than 800 underprivileged children, seniors and families from multiple beneficiary institutions.

The Mid-Autumn Festival — also called the Moon Festival or Mooncake Festival — is celebrated every year on the 15th day of the 8th month of the Chinese lunar calendar, so sometime in late September or early October on the Gregorian calendar. Here’s a quick explainer from South China Morning Post for the unfamiliar:

The press release continues:

Jasmine Lee, EY Hong Kong and Macau Managing Partner, says: “My heartfelt thanks to the charitable organizations and volunteers for their support on this campaign and their charitable efforts. Their support and facilitation have enabled our series of activities to be held smoothly. Akin to the Mid-Autumn Festival full moon, mooncakes symbolize reunion and harmony, while the society serves as a whole, and we are all a part of it. On top of adding the festivities to the holiday through these activities, allowing everyone to welcome and enjoy the Mid-Autumn Festival, we witnessed the coming together of community resources and strength. More importantly, we hope to continue conveying the message of care and support to the underprivileged, and to encourage the spirit of community and charity, where everyone cares for each other and build a society of inclusivity and kindness.”

The firm has been known to hand out mooncakes to staff this time of year, too.

There, some nice news for once.

The post While PwC Begs Clients Not to Leave, EY Hands Out Cake appeared first on Going Concern.

Wrote SFC:

The deal comes after KPMG in March moved to extend its lease at its current office at 55 Second St., which it has occupied since 2003, on a short-term basis of less than three years. Its future home is located two blocks south, near Salesforce Park.

“Our planned move not only reaffirms our longstanding commitment to the city of San Francisco but also demonstrates our dedication to investing in both our people and capabilities to deliver the most innovative solutions to our clients,” said KPMG’s Chris Cimino, a managing partner in San Francisco, in a statement. “This new building, including nearly 100,000 square feet of space for our teams, will provide a superior in-office experience and foster collaboration and creativity.”

The new office will be 100,000 square feet at 505 Howard St, pictured here on Google Street View:

Look how much cleaner those curbs are at the new spot. We wouldn’t recommend eating off of them — it’s San Francisco after all — but they sure are surprisingly sparkly for downtown.

A spokesperson told the paper the new, smaller space is “consistent with market trends” and “best suited for our people and our clients.”

As far as we know, most of KPMG is operating a roughly 3-day in office hybrid model. The 1,000 people working at KPMG San Francisco will be building neighbors with Intuit, who will be taking possession of about 36,500 square feet in January 2025.

Terms of the lease weren’t disclosed.

Bonus Google reviews of KPMG San Francisco since we happened to be on Google Maps anyway:

KPMG is downsizing its San Francisco office. Here’s where the accounting giant is moving [San Francisco Chronicle]

The post KPMG Is Ditching 38,000 Square Feet in San Francisco appeared first on Going Concern.

The total reported aggregate global revenue (unaudited): $67.2 billion for the fiscal year ending May 31, 2024. That’s a 3.1% increase in local currency (3.6% increase in USD) from FY2023. By comparison, the jump from 2022 to 2023 was a 14.9% increase; revenue growth from 2021 to 2022 was a staggering 19.6%. from Deloitte’s 2022 revenue, not quite as big a jump as the 19.6% increase between 2021 ($50.2 billion) and 2022 ($59.3 billion). It was only a few revenue announcements ago that Deloitte became the first Big 4 firm in history to break $50 billion in global revenue.

• 2024: $67.2 billion
• 2023: $64.9 billion
• 2022: $59.3 billion
• 2021: $50.2 billion
• 2020: $47.6 billion

“In a complex global environment over the past year, Deloitte successfully sustained a growth trajectory while investing heavily in the next generation of capabilities aligned to emerging areas of client demand,” says Joe Ucuzoglu, Deloitte Global CEO. “Our unrivaled breadth of capabilities spanning advanced technologies, sector depth, and expertise in critical business functions, positions Deloitte uniquely to help clients, markets, and society at large maximize the value of tech-driven transformation.”

Scrolling through the press release to figure out what information needs to be passed along to dear reader we got the idea to plug this thing into a word counter. Supposedly it’s “only” 2,718 words. Feels like five times that.

Growth — or shrink — by service line (in local currency):

• Tax & Legal: 8.7%
• Audit and Assurance: 4.1%
• Risk Advisory: 3.2%
• Consulting: 1.9% (ouch)
• Financial Advisory: -3.8% (double ouch)

There’s nothing else of value in this press release unless you enjoy the text version of those obscure videos of some guy trying to get his mouth around his own junk.

PwC or EY should be next to report revenue results, we’re going to guess it’s PwC since they just kicked off a round of layoffs.

Deloitte reports FY2024 revenue [Deloitte]

The post Deloitte’s Bringing a Small D to Revenue Season This Year appeared first on Going Concern.

This Week in PCAOB Paper-Pushing

US SEC approves new audit quality benchmarks over Republican objections [Reuters]
Wall Street’s top regulator on Monday gave the nod to new accounting standards set by a watchdog agency, part of an effort to address concerns about the prevalence of poor quality audits. The five-person U.S. Securities and Exchange Commission voted 3-2, with Republican members objecting to what they said was a hasty drafting process and unnecessary burdens likely to fall on smaller audit firms.

SEC as EQCF: Statement on Public Company Accounting Oversight Board; Notice of Filing of Proposed Rules on a Firm’s System of Quality Control and Related Amendments to PCAOB Standards [Statement by SEC Commissioner Hester Peirce]
Auditors play a critical role in maintaining healthy capital markets. Comprehensive, dynamic quality control systems help audit firms fulfill their mission. Troublingly high audit deficiency rates, though likely attributable to multiple causes, suggest that the five-year-long effort by the Public Company Accounting Oversight Board (“PCAOB” or “Board”) to revamp its outdated quality control standards was warranted.[1] Getting the quality control standard right, however, would have required more time for additional pointed questions, comment, reflection, and revision. The PCAOB, now with the Commission’s assent, cut the process short and put out QC 1000, a standard that still needs work. Accordingly, I am unable to support it. Ironically, with respect to a standard that focuses on quality control, the Commission has failed to perform the external quality control function which Congress entrusted to us.

‘Surreal’ venue fight erupts in constitutional challenge to accounting oversight board [Reuters]
For the third time in the last several months, a conservative U.S. appeals court is being asked to reclaim its authority over a lawsuit against a federal regulator after the case was transferred to Washington, D.C. On Thursday, an anonymous Texas accounting firm filed a petition [PDF] at the 5th U.S. Circuit Court of Appeals, arguing that a Houston federal judge wrongly transferred its lawsuit alleging that the Public Company Accounting Oversight Board wields unconstitutional power. The plaintiff, identified in the litigation only as John Doe Corporation, contends that when U.S. District Judge Lee Rosenthal of Houston transferred its case to Washington, D.C., she disregarded a standing order in her district that requires judges to give plaintiffs 21 days to appeal before shifting their cases to courts outside of the 5th Circuit.

Technology

How AI Can Guide Introverts to Success in Professional Services [Kiplinger]
The takeaway here is to be as introverted as possible if you want to sabotage your firm’s private equity schemes.
Artificial Intelligence, or AI, might be able to help introverts sell with less social discomfort and higher effectiveness, offering help for a challenge many accounting and law firm partners suffer with. While the professional services industry remains highly fragmented — one of the telltale signs private equity investors generally look for — the growth model is dependent on a very few rainmakers at any given firm. That means growing revenue is potentially difficult, unpredictable and slow to change.

Machine learning technique predicts likely accounting fraud across supply chains [EurekAlert!]
As the perpetrators of accounting fraud become ever more sophisticated in their techniques, fraud detection needs to step up its game. Thankfully, a group of researchers have devised a new machine learning ‘detective’ that is able to analyze not just fraud at a single firm, but predict likely fraud across whole supply chains and industries. A paper describing the team’s approach was published in the journal Big Data Mining and Analytics on August 28.

Pipeline

Accounting pipeline crisis presents opportunity [Spokane Journal of Business]
Elvis Presley is credited for once stating “I have no use for bodyguards, but I have very specific use for two highly trained certified public accountants.” Today, CPAs enjoy a collective reputation as trustworthy and respected professionals, in part due to the number of regulatory agencies that oversee their work—Securities and Exchange Commission, IRS, National Association of State Boards of Accountancy, Public Company Accounting Oversight Board, and more. Continuing education also is required to maintain CPA licenses. CPAs possess technical knowledge relied upon by stakeholders throughout the business world.

Talent

HEY, EMPLOYERS! We’ve seen those online job listings, we know you’re hiring. Let Accountingfly help with your remote accounting job openings and check out this week’s top candidates for your browsing pleasure.

Sign up for Always-On Recruiting to get great candidates sent directly to you every week, FREE!

Big 4

PwC spin-off Vialto to restructure $1.5 bln debt after cost overruns, FT reports [Reuters]
Global tax and immigration consultancy firm Vialto, which used to be part of PwC, is planning to restructure $1.5 billion of debt loaded onto the business in a private equity buyout after running into financial difficulty following its separation from the Big Four firm, the Financial Times reported on Friday. PwC sold its global mobility business to U.S. private equity firm Clayton, Dubilier & Rice in 2022 in a $2.2 billion deal to raise capital to invest in faster-growing areas of its consulting business, the report said. The firm was renamed to Vialto after the buyout, it added.

Major accountancy firm says don’t blame Airbnb [The Negotiator]
A report from accountancy firm EY has claimed there is ‘little to no relationship’ between the explosion in holiday lets in the UK and the current housing crisis. The firm has said that Airbnb had instead added £5.7bn to the country’s economy in 2023 and that any Labour crack-down on holiday lets would be likely to damage the tourist industry. One of the main means of controlling the growth in holiday lets is allowing councils to double or even triple council tax for them.

LinkedIn user says what we’re all thinking:

pic.twitter.com/AbEqNCE9gm

— Going Concern (@going_concern) September 13, 2024

Related: Deloitte is Out Here Being Cringey on LinkedIn Again

The challenge of LGBTQI+ inclusion at Big Four firms [Phys.org]
The Big Four firms are eager to adopt progressive positions in support of diversity, but it doesn’t always play out in reality for staff. The experiences of LGBTQI+ people working in professional services are still heavily influenced by their clients, according to a new study from the University of Sydney Business School. The research, published in Accounting, Auditing & Accountability Journal, is based on 56 in-depth interviews between 2018 and 2019 with LGBTQI+ staff and allies in Australia across the Big Four firms: Deloitte, EY, KPMG, and PwC. The study was led by Dr. Matthew Egan, a Senior Lecturer in Accounting, Governance and Regulation at the University of Sydney, and explored the experiences of professionals during and following the legislative passing of marriage equality in 2017.

Deloitte brings back face-to-face UK graduate interviews [Financial Times]
Deloitte has reinstated in-person interviews for its UK graduate scheme, amid pressure from the accounting regulator for firms to clamp down on the potential for cheating in virtual assessments. The Big Four firm said it would return to in-person interviews from September for those applying for its graduate and apprenticeship programmes, after switching to a fully online recruitment process during the pandemic. The change comes after the Financial Reporting Council said that Deloitte’s fully online recruitment process posed potential “risks” in its annual review of audit quality at the firm, which was published in July.

Wisdom

Not sure who needs to read this but…

Comment
byu/Zobot08 from discussion
inAccounting

The Department of Defense’s $2.4 Billion “Submarine” Mistake [The Heritage Foundation]
Deloitte’s $2.4 Billion Contract to Build Submarines Shows How Badly Misaligned Defense Spending Has Become: Once again Congress is in the midst of a budget crisis that could again result in a government shutdown. Almost on cue, Defense Secretary Lloyd Austin is expressing grave concern about how a six-month continuing resolution to keep government funded will affect the military. As it stands today, Deloitte is not known as a shipbuilder, nor is it clear it could meaningfully contribute to the construction of submarines. As such, it is insightful that the Navy has been silent on this contract, as the Office of the Secretary of Defense (OSD) inked the deal.

Kansas Athletics and Deloitte Enter into First-of-its-Kind Partnership [University of Kansas]
Kansas Athletics and Deloitte’s US College Athletics practice have entered into a first-of-its-kind collaboration to best position the Jayhawks in navigating the dynamic new world of intercollegiate athletics. Deloitte will work alongside athletics administration and coaches to build upon the department’s objective of being an innovative leader in the industry, provide first-class experiences for student-athletes, and elevate the University of Kansas, the region and the state. Deloitte will examine and evaluate how Kansas Athletics can best be prepared to navigate this transformational time.

Office Space

Accounting Firm Armanino Takes 19K SF at 437 Madison [Commercial Observer]
Armanino signed a 10-year lease for 19,135 square feet on the entire 37th floor of 437 Madison Avenue, according to Sage, which co-owns the building with the Travelers Companies. Asking rent was $105 per square foot.

Placer.ai Office Index: August 2024 Recap [Placer.ai]
In August 2024, office visits nationwide were 68.8% of August 2019 levels – slightly below the post-pandemic office visit recovery level seen in July. Also in August, Miami, New York, Atlanta, and Dallas outperformed the nationwide baseline for year-over-five-year (Yo5Y) office recovery – while Los Angeles and San Francisco lagged behind. Year over year (YoY), Atlanta saw the most impressive office visit growth (7.3%).

Audit

Auditor-Hopping Is Rare, but 13 Small Companies Defy the Trend [Bloomberg Tax]
Companies switch business strategy, headquarters, or even corporate names. What they don’t often change is the outside firm that vets their books. Thirteen public companies prove the exception to this rule. These businesses hired and fired auditors more than seven times apiece in the past decade, according to an analysis of data from Ideagen Audit Analytics. They share similar characteristics: their shares all trade below $1 each and some of them are in emerging industries like cannabis. All but one trades over the counter, meaning they don’t meet the minimum financial thresholds to be listed on major exchanges like Nasdaq or the New York Stock Exchange.

The Future!

AICPA chair: Why change is good, and needed, for the profession [Journal of Accountancy podcast]
Carla McCall, CPA, CGMA, managing partner of the firm AAFCPAs, began her one-year term as AICPA chair in May. In this JofA podcast episode, she said that “whirlwind” was a good description of the first few months in the role, “but in a good way.” “If you truly love what you do, somehow it doesn’t seem so arduous and it goes by real quick,” McCall said, labeling interactions with numerous people in the profession as “rewarding.” In this episode, McCall reflects on what she’s learned about herself, why her firm has benefited from her “front-row seat,” and her message to accountants about doing their part to grow the talent pipeline.

Survey Results Are In: Charting the Future of Accounting [CPA Practice Advisor]
The accounting profession stands at the precipice of transformative change driven by rapid advancements in technology and evolving client expectations. This Canopy and CPA Practice Advisor survey asked respondents to share where they currently were and where they thought their firms would be three to five years from now on topics like automation, AI integration, workforce dynamics, remote work models, client interaction, digital transformation, security and more.

The post Friday Footnotes: Someone Hates the Quality Control Standard; EY Associate Doesn’t Care; Deloitte Doesn’t Build Ships | 9.13.24 appeared first on Going Concern.

Wrote AP:

China’s Ministry of Finance said in a statement Friday that it was imposing 116 million yuan ($16.35 million) in fines and confiscation of illegal gains on PwC Zhong Tian, also known as PwC China, as well as a six-month business suspension, revocation of PwC’s Guangzhou branch and an administrative warning.

In a separate action, the China Securities Regulatory Commission punished them to the tune of 325 million yuan ($45.8 million). This brings them to a grand total of a little more than $62 million yeeted from their revenue of approximately $1.1 billion (2022 revenue), so a 5.6% hit.

To date, this is the worst punishment a Big 4 firm has received in China. #1 in something yet again, PwC! You go.

In a statement addressing the ban, PwC said they are “disappointed” by PwC’s audit work “which fell unacceptably below the standards we expect of member firms of the PwC network.” They also threw some people under the bus:

PwC China has a long history of high quality audits and we do not believe that the behaviour of a very small number of engagement team members is representative of the work of the vast majority of PwC China’s 18,000 professionals.

“The work performed by PwC Zhong Tian’s Hengda audit team fell well below our high expectations and was completely unacceptable,” said PwC Global Chair Mohamed Kande. “It is not representative of what we stand for as a network and there is no room for this at PwC. That is why, following a thorough investigation, we ensured that actions were taken to hold those responsible to account and a comprehensive remediation programme will build a stronger PwC China firm for the future. China remains an important part of the PwC network and I remain confident in the China firm’s partners and staff as we work together to rebuild trust with stakeholders.”

PwC China and its Governance Board, with support from the PwC network, took a few accountability and remedial actions to address this matter. They:

• Terminated the employment of 6 partners and exited 5 staff directly involved in the Hengda audit work [Ed. note: Hengda is the principal subsidiary of China Evergrande Group, a listed company in Hong Kong.]
• Have taken accountability actions and commenced the process of issuing financial penalties for current and former firm leadership who were responsible for the business.

Daniel Li agreed to step down as PwC China’s Territory Senior Partner (TSP) given his former responsibilities as PwC China’s Head of Assurance. He will continue to support the business in his role as Chief Accountant of PwC Zhong Tian. Hemione Hudson, PwC’s Global Risk & Regulatory Leader, has been appointed to serve as the interim TSP and will relocate once the steps required to effect her transfer to PwC China have been completed.

Kevin Wang, Head of Assurance, will have an elevated role leading the audit and assurance business for PwC China.

When FT reported on the expected ban last month, they said PwC “assured clients that staff will keep working during the suspension and will be able to certify the audit opinions on their 2024 annual reports once the ban is lifted in March.”

The post China Puts PwC in the Punishment Corner For Six Months and Confiscates ‘Illegal Gains’ appeared first on Going Concern.

The comment:

Comment
byu/Delicious_Chip_6339 from discussion
inAccounting

And there it is:

In a format one can actually read (As noted above, this is in thousands, except share data):

So there you go. Off to go dig around in EDGAR to find more accounting firm/private equity transaction deets, brb.

The post Let’s Look at Apollo’s 10-Q to Get Specifics on Their Deal with BDO appeared first on Going Concern.

On September 10, NASBA received and processed the following scores from the AICPA: pic.twitter.com/fU2fBiPuYN

— NASBA (@NASBA) September 10, 2024

Alright so in this batch of scores for people who sat between July 1 and July 31 we have:

Excluding the international test-takers, that gives us 4,954 discipline scores released in July. We’d say “discipline sections taken” but there are no doubt people who walk out or whose exams get messed up at Prometric so for the purposes of this article, we’re speaking specifically about the number of scores as reported by NASBA.

Going back to the two earlier score releases on June 28 (testing dates: April 20 to May 19):

On June 28, NASBA received and processed the following scores from the AICPA: pic.twitter.com/MCuNsOsKWK

— NASBA (@NASBA) June 28, 2024

And April 24 (testing dates: January 10 to February 6):

On April 24, NASBA received and processed the following scores from the AICPA: pic.twitter.com/WZg939rFs6

— NASBA (@NASBA) April 24, 2024

Adding the number of scores processed in the three score releases of this year gives us this total number of exams taken:

Total domestic discipline sections completed and scored as of July 31, 2024: 9,539

There is one more discipline score release remaining for 2024, due on December 10 for the upcoming testing window of October 1 to October 31. We’ll revise our numbers then.

As always, the mathletes in our audience are encouraged to double-check our math because this author flunked Algebra 2.

The post Doing the Math on CPA Evolution: How Many Discipline Scores Have Been Released So Far This Year? appeared first on Going Concern.

You’ve Got to Be Kidding

How To Make Accounting Cool Again [Forbes]
Oh here we go with this shit again. The best part of this article:

Academia

Navigating New Age of Accounting Means Balancing Books and Bots [Bloomberg Tax]
University of Richmond professor Robert Pawlewicz writes:
The accounting profession today isn’t the one I entered in 2000. It’s not even the profession that some of my students entered just six or seven years ago. Technology enhancements, including analytics and generative artificial intelligence, a dwindling pipeline of accounting students, and a generational shift in the population of accountants have forced structural changes on what has been typically seen as a hidebound and stodgy profession. The good news is universities that educate future accountants are adapting to this brave new world so their graduates can handle these new demands.

Former audit partner at Grant Thornton joins college as executive-in-residence [Marquette Today]
The College of Business Administration has added Gregg Rusk as its latest executive-in-residence in accounting. Rusk spent 35 years working at public accounting firm Grant Thornton, with 23 of them as a partner. During that time, Rusk advised more than 50 public companies and their boards on audit, internal controls and accounting issues. He assisted clients with initial public offerings that raised over $2.5 billion, public and private debt offerings totaling $10 billion, along with over 75 mergers and acquisitions. He worked at GT’s Chicago, London and Miami offices. He specialized in international companies and traveled and worked in 50+ countries across six continents.

News

Donald Trump says he’ll task Elon Musk with auditing the entire federal government [The Verge]
Former President Donald Trump says that if reelected, he’ll create a government efficiency task force — and that Elon Musk has already agreed to lead it. During a speech in New York on Thursday, Trump said the new efficiency commission would conduct a “complete financial and performance audit of the entire federal government” and make recommendations for “drastic reforms.”

Labor market isn’t breaking down but it’s ‘skating on thin ice,’ says KPMG’s Diane Swonk [CNBC]

Ultra-Rich Families Set to Control $9.5 Trillion by 2030, Deloitte Says [Bloomberg]
The wealth of ultra-rich families will likely swell to $9.5 trillion by 2030, according to estimates from consultancy Deloitte, as family offices grow and morph to rival hedge funds. The figure would mark a 73% jump from the current $5.5 trillion controlled by people represented by family offices, according to the report. The number of investment firms for the wealthy is expected to grow by one-third over the same time period, to 10,720.

Pawhuska financial auditor resigns [Pawhuska Journal-Capital]
The Vinita-based accountant that the City of Pawhuska engaged to perform its 2022-2023 audit [for a cost of $12,000] resigned, leaving the job more than eight months late and unfinished. City Manager Jerry Eubanks said he was informed by telephone Thursday, Sept. 5 by City Attorney John Heskett that the auditor, David Clanin, had resigned. Clanin was tasked with completing the 2022-2023 Pawhuska audit which was due to the state auditor and inspector by Dec. 31, 2023. With the report unfinished, the state is withholding the monthly remittance of gasoline tax revenue to the city. “I guess we’re going to have to find someone to do that audit,” Eubanks said. It is probable that this will mean a new auditor will have to start the job all over again, he said.

Earlier: Late financial audit frustrates Pawhuska city officials, complicates city budget

Big 4

Deloitte, top executive part ways over ‘conflict of interest’ [The Economic Times]
Professional services major Deloitte India has parted ways with its turnaround and restructuring services leader, Sumit Khanna, due to concerns related to a conflict of interest, multiple sources familiar with the situation told ET. “Deloitte conducted an inquiry for almost two months after an anonymous letter was received detailing certain allegations against Khanna. Both parties decided to part ways after this inquiry, which included clarifications sought from his side as well,” said a person aware of the case.

KPMG and Stephen Curry’s UNDERRATED Golf Ring the Opening Bell [Nasdaq]
UNDERRATED Golf is a purpose-driven business endeavor with the overarching commitment to providing equity, access and opportunity to student-athletes from every community.

Are you an ethical tax advisor? If not, watch out! [Deloitte]
More fallout from the PwC tax scandal. Way to go, P-Dubs, way to go.
The International Ethics Standards Board for Accountants (IESBA) tax planning project has culminated in a framework of expected ethical behaviours for accountants providing tax planning services and a new Ethical Standard for Tax Planning (the Standard). The Standard applies to ‘tax planning services’ and related activities. This does not include tax evasion, which is illegal, and covered by existing Code of Ethics standards. Instead, ‘tax planning’ covers advisory activities that assist an employing organisation or a client in planning or structuring affairs in a tax-efficient manner. Different sections apply to members in business who perform tax planning activities and members in public practice who provide tax planning services. This distinction essentially separates accountants who perform the in-house tax function of an organisation (‘in business’) and accountants employed by advisory firms (‘in public practice’).

Deloitte leases 80,000 sq ft space in Oberoi Commerz building in Mumbai for ₹2.09 crore per month [Hindustan Times] ₹2.09 crore = $249k USD. Deloitte Shared Services India LLP has leased 80,849 sq ft of office space at the Oberoi Commerz III building in Mumbai at a monthly rent of ₹2.09 crore a month, according to the leave and license agreement shared by Propstack. The space spread across two floors has been leased for five years. Terms of the deal include a 15% escalation in rent after 36 months. The starting rent works out to be ₹258 per sq ft per month, the documents showed.

Not Big 4

Meet the 2024 Best Midsized and Large Firms to Work For [Accounting Today]
Each year, Accounting Today and Best Companies Group select the Best Accounting Firms to Work For. This slideshow includes the best in the Midsized Category (firms with between 50-249 employees) and the Large Category (250 or more employees) with their rankings and select information on the firms, as well as photos the firms submitted themselves (or, occasionally, their website).

EY draws up female-dominated shortlist for top UK job [Financial Times]
EY has drawn up a female-dominated shortlist of candidates to succeed Hywel Ball as the firm’s UK managing partner, laying the groundwork for a contest that could produce the first woman to become the permanent head of a Big Four accountancy in Britain.

Binance Hires UK-Based Accounting Firm Grant Thornton to Advise on Audits [CoinDesk]
Binance has hired U.K.-based Grant Thornton’s Singapore devision to advise on accounting and tax matters, it announced Wednesday. The crypto exchange previously worked with auditing firm Mazars to produce a proof-of-reserves report for crypto clients, however, Mazars in December 2022 said it had paused work with Binance and other crypto clients amid concerns over the public’s misunderstanding of those reports.

Marcum Announces 15 New Partners Across the U.S. [Marcum]
Jeffrey Weiner, Chairman & Chief Executive Officer of Marcum, praised the newly appointed partners, stating, “These individuals represent Marcum’s dedication to excellence. They bring a wealth of experience, skill, and an entrepreneurial spirit. In a rapidly evolving world, they have shown adaptability and dedication to understanding and exceeding our clients’ expectations. On behalf of the entire firm, I congratulate our new partners on this well-deserved achievement.” The new partners assumed their roles September 1.

Relatable

Justice Jackson Had ‘Wrenching’ Time as Big Law Working Mom [Bloomberg]
Supreme Court Justice Ketanji Brown Jackson described her return to law firm life after the birth of her first daughter as “wrenching,” saying she “drastically underestimated the challenges of new motherhood.” “I can honestly say that going back into the office as a new mother, and returning to the cadence and pressures of Big Law, was the stuff of nightmares,” Jackson said in her memoir, “Lovely One,” which was released Tuesday.

The post Friday Footnotes: The Least Disingenuous Senior Partner; Accounting Education Evolves; KPMG Rings a Bell | 9.6.24 appeared first on Going Concern.

Rumors have been swirling for weeks like so many unflushable logs that KPMG was about to announce unlimited PTO, something their competitors at EY did four years ago.

As seen on r/KPMG:

You all were right. They just announced unlimited PTO
byu/Active_Ease_2367 inKPMG

EY’s switch to unlimited PTO was immediately shat upon, and rightfully so, after a leaked senior management email made the rounds. The email mentioned a cost savings of $36 million per year “associated with paying unused vacation at termination” as a primary motivator for the change. “Eliminates entitlement mentality and need for for carryover of unused time or sense of ‘loss’ by our people,” the email said.

It appears at first glance KPMG didn’t want to make the same mistake (though they’ll still be saving money on vacation that no longer accrues, to be clear). This is what KPMG said in their announcement, according to a commenter:

All PTO balances remaining at the end of FY24 (after the annual carryover limit is applied, where applicable) will remain with you and will be paid out to you when you leave the firm, based on your pay rate when you leave.

Elsewhere in the Paid Time Off Policy it says:

Regular Exempt Employees who have accrued, unused vacation as of September 30, 2024, under the firm’s previous Personal Time Off Program shall have all unused accrued vacation as of that date “frozen” (after the annual carryover limit is applied) and paid out at the time of separation, or paid out or used at such other time and circumstances as the firm determines in its sole discretion, at the employee’s then pay rate.

Wonder how many lawyers it took to write that.

Related read: The smoke and mirrors of unlimited paid time off

The post KPMG Gets Aboard the Unlimited PTO Train appeared first on Going Concern.

“Face-to-face working is hugely important to a people business like ours, and the new policy tips the balance of our working week into being located alongside clients and colleagues,” said PwC UK managing partner Laura Hinton in a statement to Bberg.

Anyone at PwC UK who’s angrily polishing up their resume this afternoon after receiving this news should read this: Survey Confirms What We Already Knew: RTO Mandates Were Intended to Get People to Quit.

In July, Financial Times broke the news that raises and bonuses were stingy at the King’s PwC this year, too. At least for some teams/service lines. They also axed the popular half-day summer Fridays, actions that when considered in the aggregate would compel a reasonable person to assume they really do hate you and want you to leave. See also: Comp Season PSA: If You’re Disappointed, It Might Be Because They Want You to Quit

Attrition must still be too high. Much like PIP distribution. Almost as if all these things are connected…

PwC UK, perhaps more so than other Big 4 firms or maybe it only appears that way because they keep getting stories about it in the news, is highly motivated to maintain an appearance of business as usual despite challenging market conditions. When they did a round of voluntary separations in June, the firm told staff to fib about their departure even though people talk and news of silent layoffs had been hanging in the air for weeks by the time people started abruptly disappearing.

Getting a bunch of people to leave because they don’t want to be in the office for at least 60% of the week is far cleaner than having to quietly usher another batch of people out of the back door before anyone notices.

Update: Financial Times followed up on this RTO news with a bit more info: the firm let everyone know they’ll be tracking them like cattle to ensure compliance with the new policy and that location data will be sent to staff career coaches.

In a memo sent to staff on Thursday, seen by the Financial Times, managing partner Laura Hinton said that the firm would begin sending staff their working location data every month, adding that employees must now spend “a minimum of three days a week” in the office or at client sites.

“We will start sharing your individual working location data with you on a monthly basis from January as we do with other data such as chargeable hours,” Hinton wrote in the memo. “This will help to ensure that the new policy is being fairly and consistently applied across our business.”

This applies to 26,000 people working at PwC UK.

Big Four Accounting Firm PwC UK Orders Staff Back to the Office [Bloomberg]

The post PwC UK Orders the Troops Back to the Office For Three or More Days a Week (UPDATE) appeared first on Going Concern.

CBIZ is the biggest firm to be data breached in recent months that we’re aware of since PwC and EY found themselves tangled in the MOVEit cybersecurity breach and ransom last year. CBIZ was also hit by the MOVEit vulnerability and informed 35,843 people their Social Security numbers were probably jacked by bad actors last year.

CBIZ Benefits & Insurance Services, Inc. provides actuarial, administration and investment advisory solution services for organizations, as well as providing recordkeeping and administration for retiree health and welfare plans.

According to the notification, it was retiree health and welfare plans that were accessed and the data included names and Social Security numbers.

Says the notification:

On June 24, 2024, CBIZ learned that an unauthorized party may have acquired information from certain databases. CBIZ promptly launched an investigation with the assistance of cybersecurity professionals. CBIZ’s investigation determined that an unauthorized party was able to exploit a vulnerability associated with one of its web pages, and acquired information from certain databases between June 2, 2024 and June 21, 2024. CBIZ conducted a review of the data acquired and determined that individuals associated with multiple CBIZ clients were impacted by the incident.

The retiree plan clients are:

• Central Pennsylvania Teamsters
• Knoll, Inc.
• Liberty Utilities
• Sanofi
• Sanofi Pasteur

Seven Maine residents were affected by this breach. No information was given on how many victims there may be in other states in the AG filing referred to here. CBIZ began notifying victims on August 28, 2024.

The post Hackers Stole Social Security Numbers From CBIZ Again appeared first on Going Concern.

On Saturday, Financial Times reported that due to a “market slowdown,” EY UK has gotten rid of a small number of partners and given out annual salary increases of 2.2% to its 4,400-person tax advisory business. It was six percent in 2023 and 10 percent in 2022. FT said bonuses would be smaller as well (£500 for junior staff — that’s $655 USD — to £4,000 for directors) and explained the math thusly:

Bonuses for EY employees are calculated using a “variable performance share price” system where each employee has a specified number of “shares” according to their rank, people familiar with the matter said. The number of shares is multiplied by the value of one share — a figure set by management each year — to determine what bonuses are paid out.

High performers would, as always, receive more though no number was given. EY brazenly told FT that its tax practice “continues to grow” and said that raises and bonuses “vary based on individual and business unit performance.”

FT said tax advisory usually does OK during market turbulence, or at least shouldn’t be suffering as hard as deals and consulting in this market.

The firm gave the same spiel about difficult market conditions last year, saying that due to rising costs and a difficult economic outlook, just about everyone would get a smaller bonus as it cut the raise and bonus pool by about 30%. The firm wouldn’t tell FT what raises and bonuses were for other service lines this year, hopefully some birdies with big flapping mouths are in reporters’ inboxes right now spilling those specifics.

After peaking at 11.1% in October 2022, consumer price inflation in the UK was down to 2% in the 12 months to June 2024 with services inflation at 5.7%. Taylor Swift was partially blamed for the higher-than-expected 2% increase (we’re not joking). Core CPI was at 3.5% as of June, officially making these raises a pay cut assuming EY UKers use energy and pay rent.

EY UK partner pay took a hit last year, dipping from £803,000 ($1.1 million USD) in 2022 to £761,000 ($997k USD) for the year ended June 30, 2023.

We’ve seen similar disappointment here on our side of the pond with some EYers reporting NO raise or bonus this compensation season. Y’all, they want you to quit. How many times do we have to say this.

EY cuts pay rises and bonuses for UK tax staff after slower year [FT]

The post The King’s EY Gives Out Pay Cuts For Raises appeared first on Going Concern.

News

Morris County Native Michael Brown, 23, Was Set To Begin New Job At EY, Obituary Says [Pascack Daily Voice]
According to his obituary on the William Leber Funeral Home website, Michael graduated from  West Morris Central High School before earning a degree from the University of Alabama. He was set to begin a new job at EY in Atlanta, GA. He had checked off an item on a summer bucket list this year, hiking across national parks along the West Coast, camping out or sleeping on a friend’s couch, Michael’s obituary reads.

North Jersey man sues law and accounting firms, says they padded his bills to nearly $2M [NorthJersey.com]
An Oradell man is suing the law firm Sills Cummis & Gross PC and accounting firm CohnReznick, alleging the two entities padded his total bills to nearly $2 million. In the four-count suit filed Aug. 26 in state Superior Court in Passaic County, Richard Hekemian alleges that Sills Cummis & Gross, based in Newark, “overcharged and overbilled” him, including through double and multiple billing “for the same legal services, or simply ‘padding’ the invoices.”

Accountancy firms fight back against audit reforms [Financial Times Opinion]
A new rule agreed by the US audit regulator, the Public Company Accounting Oversight Board, will force each of the biggest firms to establish a body to oversee quality control, and to make sure at least one person on it comes from outside the firm. The rule is part of a broader revamp of quality control standards that the industry wrote itself decades ago and which are only now being updated by the PCAOB, some 20 years after the agency was created following the Enron scandal. A number of big firms, including PwC and BDO, are trying to kill the rule at the eleventh hour in a move that has raised eyebrows among some investor groups, which point out that many firms already boast of having bodies that sound a lot like what is being proposed.

Practice Management

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Check out this week’s top remote accounting candidates here:

How CPAs can bring order to a disorderly world [Journal of Accountancy] PCAOB Board member Christina Ho wrote something for JofA. We just want to share this unironic graphic:

Survey Says

2024 Internal Audit Priorities Survey Reveals Technology and Cybersecurity as Top Concerns Amidst Rising Generative AI Adoption [PR Newswire]
Jefferson Wells, a leading professional services firm specializing in Finance & Accounting, Internal Audit, Risk & Compliance, and Tax, and part of the ManpowerGroup family of brands, released the results of its eighth annual Internal Audit Priorities Survey. The survey reveals that while cybersecurity remains the top risk, the rise in the usage of Generative AI tools is escalating in risk priority for IA leaders and audit committees. Despite this, only 26% of organizations have fully integrated Generative AI standards into their governance framework, indicating a need for more comprehensive controls. Business Transformation and IT Deployment risks necessitate more in-depth internal audit skillsets in cybersecurity, data analytics, IT audit, and Generative AI, which are the most challenging to train and retain. Consequently, 37% of organizations are planning to increase staff to meet the heightened demand for these technology skills – the first significant increase in internal audit departments planning to expand their teams since 2020.

Associations Are Financially Optimistic and Developing their Tech Spend, According to New Wipfli Survey [PR Newswire]
According to Wipfli’s 2024 State of Associations Report, professional and trade associations alike show strong resilience and optimism about their markets, with finances and memberships up from the past year. Associations face several challenges within their space, and sometimes merging with similar organizations can help them better serve their members, leading 77% of respondents expecting to merge or consolidate with other associations in the next two-to-five years. Overall, while associations work within countless different verticals, common threadlines such as adaptability in changing scenarios, revenue streams, recruitment & retention issues, and technology concerns were present for associations of all sizes.

Municipal News

Village clerk of tiny Nebraska town resigns amid probe by state auditor’s team [Nebraska Examiner]
The village of Litchfield in central Nebraska “boasts a whopping 280 people,” according to its website, which goes on to say that the small-town atmosphere contributes to a high quality of life. But a Nebraska State Auditor’s Office probe into village operations has disrupted the calm, revealing apparent misappropriation of public funds, inaccurate utility billings and lack of documentation. Auditor Mike Foley, when releasing results, zeroed in on fiduciary responsibilities despite the size of a municipality. He said that “for various reasons” proper financial controls can sometimes be “less vigorous” among smaller political subdivisions.

Missouri state auditor granted new authority over local governments [StateScoop]
Starting Wednesday, under House Bill 2111, which Gov. Mike Parson approved in July, the Missouri state auditor will have the authority to conduct audits of local and municipal government organizations, including larger counties like St. Louis and Jackson, where most of Kansas City is located. “What we found over the years is that a lot of the fraud is in those smaller political subdivisions, because they have fewer internal controls, they have fewer employees, and they’re just in an environment that makes it easier for people to steal money,” Missouri State Auditor Scott Fitzpatrick told StateScoop in a recent interview. “House Bill 2111 will give us the ability to initiate audits of those political subdivisions, which we currently cannot do unless we get a petition from the citizens of the of that area.”

PA Auditor General releases audit claiming taxpayers were overcharged for prescription drugs [WTAE]
Pennsylvania’s auditor general released the findings of an audit on Wednesday, claiming taxpayers were overcharged for prescription drugs in 2022. “We found that $7 million in transaction fees were not disclosed by PBMs and MCOs (managed care organizations) to DHS (Department of Human Services), DHS then used this inflated data to set the rates it will pay in the future for prescription drugs,” Auditor General Timothy DeFoor said.

Audit finds Marshall County Fiscal Court had misreporting issues on financial statements [WPSD]
In a news release, Kentucky Auditor Allison Ball’s office said auditors tested 67 disbursements totaling more than $5.6 million. According to the auditor’s office, issues found included: Nineteen disbursements totaling more than $1.5 million that did not have a purchase order; Fifteen disbursements totaling more than $2.5 million that had a purchase order that was dated after the invoice date; Five disbursements totaling more than $2. 8 million that did not appear to be paid within 30 days because the invoice was not stamped when it was received; Five disbursements totaling $14,826 for utilities that were not approved by the fiscal court before being paid and were not included on the preapproved reoccurring expenses.

Firm Watch

After private equity investment, Meridian accounting firm signs deals with two other firms with Boise operations [BoiseDev]
Harris CPAs acquired Medford, Oregon-based KDP & Co., LLC, as well as Boise-based firm Chigbrow Ryan Murata, Chtd. KDP operates in the Boise area as well after a 2021 acquisition of Boise-based Whittaker & Associates. Harris President Josh Tyree told BoiseDev that the deals are more of a merger – and each of the former owners in KDP and Chigbrow Ryan remain as owners in Harris. “We’re not looking for any firm that’s just breathing, we are looking for firms that are servicing similar types of clients. We want to stay true to those things and get to some strength in numbers, we’re going to be more successful.”

Accounting firm in lease talks for Ballantyne office move, training center [Charlotte Business Journal]
Minneapolis-based CliftonLarsonAllen plans to take two floors in an unidentified Ballantyne building. Work on that 50,000-square-foot space is expected to be complete by December 2025. The firm’s Charlotte office is now in the Carillon building at 227 W. Trade St. About 250 CLA employees are expected to be located in the new space. Half of the space would be designated for office use. The other half would be used for what the company defines as a “connection center,” designed to help CLA grow and retain talent. It’s intended to bring employees from across the Charlotte area and the company under one roof for learning, development, continued training and more. CLA plans to host 150 to 200 employees at a time within the new space.

Meet Houston Business Journal’s 2024 Most Admired CEO Awards honorees [Houston Business Journal]
Bill Hickl, Texas Market Managing Principal (Tax) at BDO gets admired.

The 2024 MP Elite [Accounting Today]
To contend with a rapidly changing landscape, today’s top accounting firm leaders are required to wear more hats than ever before. Besides embodying the attributes of any great business leader, they often must serve as technologists, deal brokers, and brand ambassadors — not just for their firms but for an entire profession in dire need of attracting more young talent. PE, mergers and acquisitions, and artificial intelligence are all hot topics for the MP Elite, and it is their curious but mindful approach to these industry trends that make them role models in accounting.

Big 4

China Has Another Firm in Its Crosshairs Over Its Epic Property Bust: PwC [Wall Street Journal]
China’s epic housing bust has crushed big developers, bond-market investors and homeowners, causing billions of dollars in losses. Now Chinese regulators are zeroing in on another important player: PricewaterhouseCoopers, the auditor of choice for many of China’s biggest property firms.

Judge Rules $400 Million Algorithmic System Illegally Denied Thousands of People’s Medicaid Benefits [Gizmodo]
Thousands of Tennesseans were illegally denied Medicaid and other benefits due to programming and data errors in an algorithmic system the state uses to determine eligibility for low-income residents and people with disabilities, a U.S. District Court judge ruled this week. The TennCare Connect system—built by Deloitte and other contractors for more than $400 million—is supposed to analyze income and health information to automatically determine eligibility for benefits program applicants. But in practice, the system often doesn’t load the appropriate data, assigns beneficiaries to the wrong households, and makes incorrect eligibility determinations, according to the decision from Middle District of Tennessee Judge Waverly Crenshaw Jr. “When an enrollee is entitled to state-administered Medicaid, it should not require luck, perseverance, and zealous lawyering for him or her to receive that healthcare coverage,” Crenshaw wrote in his opinion.

What Big 4 do you think is the most morally corrupt?
byu/marihuano69x inAccounting

KPMG Recruits Veteran CPAs to Advise on AI in Audits, Quality [Bloomberg Tax]
KPMG LLP will lean on the expertise of three veteran accountants to advise the firm as it navigates the use of artificial intelligence in its audits and a ream of US rule changes. A three-person Independent Audit Quality Advisory Committee will provide outside input on how the firm responds to regulatory inspections. The committee will also help the firm as it measures progress toward strengthening the quality of its audits and builds on its adoption of AI, KPMG said Wednesday.

KPMG announcement: KPMG US Announces Formation of Independent Audit Quality Advisory Committee to Build on the Success of Quality Initiatives

You thought you knew the PwC saga. But did you know the firm released a cartoon book on its values featuring various blobs? My favourite page is this one, which presumably shows tax tweeties whispering secrets into ears pic.twitter.com/io4lPMP0g0

— Myriam Robin (@myriamrobin) August 4, 2024

The post Friday Footnotes: CPAs Need to Get Contemporary; Internal Audit Priorities for 2024; A PwC Comic Book? | 8.30.24 appeared first on Going Concern.

Here are the details:

Sequoia Financial Group, LLC (Sequoia Financial), an SEC-registered wealth manager with more than $19.3 billion in assets under management as of June 30, 2024, and Eide Bailly LLP, a top 20 national accounting firm, today announced a strategic partnership, with Sequoia Financial acquiring Eide Bailly’s wealth management practice and both firms collaborating to deliver expanded services to each other’s clients.

As part of the agreement, Eide Bailly Advisors, LLC, an SEC-registered firm with approximately $1.58 billion in assets under management as of April 30, 2024, will become part of Sequoia Financial Group, and Eide Bailly will have an equity investment in Sequoia. The firms expect the transaction to close in the fourth quarter.

Headquartered in Fargo, North Dakota, Eide Bailly has over $700 million in annual revenue and more than 3,500 employees in 40 U.S. offices, with a major footprint in the western United States. Eide Bailly’s wealth management practice serves individuals, trusts, estates, pension and profit-sharing plans, businesses, and charitable organizations.

OK, we’re with you so far.

Through this partnership, Eide Bailly’s wealth management team will join Sequoia Financial, which includes Sequoia Sentinel, a multi-family office focused on high-net-worth clients with more than $25 million in assets. Brad Kelley, principal and wealth leader for Eide Bailly Advisors, will become an executive vice president of corporate development for Sequoia Financial, responsible for leading joint initiatives between the two firms.

So Sequoia Financial is acquiring Eide Bailly’s wealth management team and Eide Bailly has an equity investment in Sequoia. That’s a fresh new twist on professional services investments. Since the beginning of 2023, Sequoia Financial has made six acquisitions: Karpas Strategies, AltruVista, Zeke Capital Advisors, Cirrus Wealth Management, Affinia Financial Group, and M Capital Advisors.

There’s private equity money tangled up in here too. Sequoia Financial Group sold a minority stake worth $200 million to Valeas Capital Partners in 2022. Valeas Capital Partners is one of the two private equity groups that bought a majority stake in Baker Tilly worth a billion dollars in February; of that investment, $900 million is alleged to have come from the other private equity group in that transaction, Hellman & Friedman. Sequoia Financial is also backed by Kudu Investment Management and FGA Partners (Pitchbook deets here) though there’s no press release announcing the latter’s investment in Sequoia (if a sequoia falls in a forest of PE money with no one to hear it does it make a sound?).

Eide Bailly hasn’t made any PE deals that we’re aware of, surely there would be a press release and a bunch of people employed there saying on Reddit “I’m polishing up my resume right now!” if they had or are imminently about to. But let’s get back to this…deal.

“We have found a true partner with a strong cultural alignment and broad range of services and expertise to support the complex wealth planning needs of our accounting and business advisory clients,” said Jeremy Hauk, Eide Bailly’s CEO and managing partner. “Over many decades we have built deep relationships with our clients. With Sequoia Financial, a recognized leader in wealth management, we can significantly enhance our offerings and serve more clients.”

Wait, so is this a referral-type situation or…? Confused again.

“This partnership is a key strategic move that will expand our wealth management footprint meaningfully, especially west of the Mississippi River, where Eide Bailly has a large presence in major wealth markets,” said Tom Haught, Sequoia Financial’s CEO. “Equally important, both firms measure success by client success. Together, we will help more businesses and families achieve their financial goals.”

Whatever.

The post Eide Bailly Gets in Some Kind of Wealth Management Circlejerk, IDK appeared first on Going Concern.

The someone added:

Just remember that Deloitte employees are never “let go” from their jobs, they are rightsized to align with the firm’s strategic objectives in light of economic uncertainty and sector level trends

Well, apparently a lot of people in audit are being rightsized this week.

Exhibit A: Plot twist, I’m ALSO being laid off.

After getting no real work done today, completely consumed by today’s events i.e. everyone around me being laid off… I also received my business update email to the shock, not only of myself, but of my team. I know you’ll all be in the comments asking, so let’s get that out of the way, I’m an audit senior, west region.

So my staff and I were laid off, it honestly feels like a mistake. There will be no one left on my team except for my manager and above, I feel a little sorry for them too. We had deadlines coming up.

I know the people around the office will try and make sense of this all, “they must’ve been a low performer” or “they must’ve missed too many time sheets.” Etc…

For the record, I was rated strongly agree on my last snapshot for both metrics. I was explicitly told this. I had made strong relationships with my team and the client. I was leading the engagement. I was doing well and my managers made that known. I hadn’t missed a time sheet this year, although I think I missed 2 last year so maybe that’s what did me in lol. Maybe it was some compliance thing that I missed last year? Who knows? They’ll chalk it up to market conditions. And no, I don’t have my cpa, even people with cpa were being laid off today/tomorrow.

TLDR: I received the “business update meeting” invite and spoiler the update is that I no longer work here anymore.

Another: Got laid off. It’s not performance related. It’s related to low business. I kind of already knew but it still stings

We don’t have much info other than a few Reddit posts, will see what more we can dig up and let you know. We don’t anticipate Deloitte will be making a public announcement but perhaps with enough stink they’ll feel forced to (spoiler: they won’t). It sounds like the numbers will be significant when all’s said and done. Wasn’t AI supposed to prevent a bloodbath like this?

Let us know if you were affected by this round of cuts and/or have more info by text or email.

The post Layoff Watch ’24: Deloitte’s Busy Scaring People with Business Update Meetings appeared first on Going Concern.

What all the Best of the Best have in common is a focus on operational and financial excellence. Leaders don’t get so caught up in the day-to-day routine that they overlook the basics of running a business and running it well. They watch their numbers and keep a steady eye on their growth goals, all while maintaining a positive work environment. Our list is designed to provide an even playing field to recognize the valuable work that drives our industry forward.

To determine which firms belong in the Best category, IPA scores firms based on their responses to the IPA Practice Management Survey using some of the following metrics: net revenue growth and leverage, along with governance policies, long-range planning efforts, professional development, outsourcing, compensation and process improvement.

There are 60 firms on the list with more than $10 million in revenue and 15 more that bring in less than that for a total of 75 firms that exemplify IPA’s definition of “Best.” Because we here at Going Concern concern ourselves most with dick-measuring contests and revenue battles, we’re only including the 20 firms on the list with more than $100 million in revenue. Trust us, most of this list is not a who’s who but rather a WHO? of firms.

Sorted by revenue, Forvis Mazars and CLA are the only two firms on the list bringing in 10 digits. The smallest firm on the list is Pittsburg’s Louis Plung & Company with $11,791,406. But remember, size doesn’t matter here. Not completely, anyway.

Yeah, we probably could have cut this list down to 10.

See the full list from INSIDE Public Accounting here.

Earlier:

The post These Are the ‘Best of the Best’ Accounting Firms (Allegedly) appeared first on Going Concern.

Just a few months after #28 IPA Top 100 firm Sikich announced a $250 million capital injection from Bain Capital, the firm has grabbed the basically unknown Saggar & Rosenberg of Rockville, Maryland. Well, Sikich Co-Managing Principal Antony Nettleton knows who they are.

“Over the last 25 years Sandy Saggar has built an impressive company that dovetails nicely with our own offerings and specialized services to non-profits and the government sector, where we have a strong presence,” he said. “We look forward to leveraging the expertise of his team, who are delivering comprehensive, enterprise-wide financial solutions to clients across the country. We will serve our collective clients together, with the integrity and quality our companies are known for, while taking advantage of emerging opportunities in the market.”

The federal government also knows the name Saggar & Rosenberg. According to USASpending.gov, an official website of the US government, S&G has won at least 33 government contracts totaling 1.2 million bucks. This deal gives Chicago-based Sikich an even stronger foothold in Washington, a “hyper-focused” growth plan zeroed in on federal government work that’s been underway since they acquired Halt, Buzas & Powell in 2019. Three years after that they bought Cotton & Company and last year they snapped up CliftonLarsonAllen’s entire federal government practice.

Saggar & Rosenberg founder Sandy Saggar made sure to mention the other clients in his press release quote, not just the federal ones. “Over the years, Saggar & Rosenberg has experienced significant growth serving a wide range of sophisticated clients who are demanding an increasing set of diverse services. We want to support those clients with a broader set of offerings as they navigate change and do so in a way that ensures the excellent service they’ve come to expect from us,” he said. “This expectation is what attracted us to Sikich, with their track record, strategy for growth and people-first mindset. Given the latter, I believe we have found a like-minded organization that will allow our employees to expand their skills and explore opportunities for growth.”

In the press release, Sikich made sure to mention that unlike those other PE-backed firms, they’ve retained majority control.

In May, Sikich secured a minority growth investment of $250 million from Bain Capital to help fund its robust acquisition strategy, enhance operational excellence and cement its professional services leadership position. The transaction, in a departure from traditional private equity deals in professional services, leaves Sikich with majority control of the company and is testament to its track record and growth strategy.

Three years since the first major private equity deal in accounting and we’re already talking about tradition? OK. They’re not wrong though, just look at recent deals by Baker Tilly and Grant Thornton. We’re told Doeren Mayhew’s private equity deal announced just last week is also a majority stake but that remains unconfirmed.

Quoting what we said when Bain Capital announced their investment in Sikich in May:

Time for Sikich to snag themselves a big fish instead of these firms no one’s heard of. We’re watching with great interest, so much so we’re adding a “Sikich” tag for the first time in the 15 years since this website was founded. Don’t let us down.

We’ll be waiting.

The post PE-Backed Sikich Buys an Accounting Firm, Subtly Smack Talks Those “Other” PE-Backed Firms appeared first on Going Concern.

Said the IRS in a press release:

The new combined effort follows a variety of increased scams and schemes that intensified during the past filing season that aimed to exploit vulnerable taxpayers while enriching fraudsters and promoters.

Convened at the request of IRS Commissioner Danny Werfel, the coalition of federal and state tax agencies along with software and financial companies as well as key national tax professional associations agreed to a three-pronged approach. They will work to expand outreach and education about emerging scams, develop new approaches to identify potentially fraudulent returns at the point of filing and create infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems.

Some familiar names have joined the effort, namely the National Association of Computerized Tax Processors, National Association of Tax Professionals, National Association of Enrolled Agents, and the National Society of Accountants. The AICPA is on board too. As are the McTax companies: Intuit, H&R Block, Jackson Hewitt, and Liberty Tax.

The IRS said there has been increased activity involving a variety of scams and schemes harming taxpayers, including the Fuel Tax Credit, household employment taxes and the Sick and Family Leave Credit.

The IRS has seen hundreds of thousands of dubious claims come in where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims.

Numerous other scams and schemes continue to be seen circulating on social media and are highlighted through efforts including the annual IRS Dirty Dozen list and alerts from the Security Summit partners. The new approach will increase collaborative efforts to raise awareness and education about schemes, not just during tax season but throughout the year.

Yes, folks, they’ve created a coalition to battle TikTok tax advice. Finally. “Social media is an easy way for scammers and others to try encouraging people to pursue some really bad ideas, and that includes ways to magically increase your tax refund,” said IRS Commissioner Danny Werfel back in April. “There are many ways to get good tax information, including @irsnews on social media and from trusted tax professionals. But people should be careful with who they’re following on social media for tax advice. Unlike hacks to fix a leaky kitchen sink or creative makeup tips, people shouldn’t rely on made-up ways on social media to patch up their tax return and boost their refund.”

Mmm, we might need a Coalition Against TikTok Makeup Hacks too.

Statements of support from leading members of the nation’s tax community for Coalition Against Scam and Scheme Threats task force [IRS]

The post Dozens of Taxy Groups Join New Coalition to Stop Scammers and TikTok Tax Advice appeared first on Going Concern.

Big News

Tax Firm Carrying On Arthur Andersen Brand Explores IPO [Wall Street Journal]
Do you know what’s really annoying? We were going to run this as a rumor story last week. People have been gossiping about it for weeks.
Andersen Global, the tax and legal services firm that emerged from the remnants of the defunct accounting giant rocked by the Enron scandal, is exploring taking its U.S. business public. The San Francisco-based firm is advancing efforts to pursue an initial public offering of the U.S. unit, Andersen, with the support of nearly all of its U.S. partners, according to internal memos reviewed by The Wall Street Journal. Ninety-nine percent of 264 participating U.S. partners voted in favor of continuing to consider an IPO earlier this month, an email showed. The U.S. unit, which offers tax, valuation and financial-advisory services, had more than 280 U.S. partners as of the start of the year. “This will enable me to advance discussions for key positions and put us in a place where we can pull the trigger when we are ready,” Andersen Chief Executive Mark Vorsatz said in a July 31 email to partners before the vote, referring to the hiring of executives and other personnel.

EY Sheds U.S. Audit Clients in Response to Shortfalls [Wall Street Journal]
Ernst & Young said it is cutting ties with many U.S. public companies as audit clients, a move to revamp its audit practice and improve the quality of its work. Eighty-four public companies exited EY as audit clients between Jan. 1, 2023, and Aug. 15 of this year, according to data from research firm Ideagen Audit Analytics. The firm also added 21 clients in that time. That is at least 50 departures more than at the other three large accounting firms—Deloitte, KPMG and PricewaterhouseCoopers—during the same period. In contrast with EY’s net loss of 63 clients, Deloitte, KPMG and PwC had net arrivals of 46, 13 and four, respectively, in that period. The reduced roster and loss of roughly $215 million in fees could threaten EY’s status as the largest auditor of U.S. public companies by market share, but that isn’t something the firm is worried about yet. The reduction is largely by design and is intended to “accelerate our transformation efforts,” said Dante D’Egidio, the firm’s Americas vice chair for assurance.

Audit

Founder of Trump Media’s Ex-Auditor Faces CPA License Loss [Bloomberg Tax]
The founder of an audit firm that was branded as a “massive fraud” by the SEC risks losing his certified public accounting license, a punishment that would prevent his firm, BF Borgers CPA PC, from performing external audits or certain complex tax returns. Colorado accounting regulators on Wednesday voted to refer the firm and its founder, Benjamin Borgers, to the state’s attorney general for CPA revocation, a spokesperson for the state’s Department of Regulatory Agencies said. Borgers may also voluntarily surrender his license, the board said.

Earlier:

SEC approves tougher rules targeting auditor ‘negligence’ [CFO Dive]
The new standard drew “no” votes from two of the five SEC commissioners, both Republicans. “This change is neither consistent with the requirements of the securities laws nor necessary or appropriate in the public interest or for the protection of investors,” Commissioner Hester Peirce said in a statement before the vote. The update “could have the unintended consequence of lowering audit quality and could worsen the trend toward fewer talented individuals entering the audit profession,” she said.

Prepping for the internal audit, CFO ‘inflection’ point [CFO Dive] Faced with a complex regulatory environment, new technologies, cybersecurity challenges, and an ongoing shortage of talent, today’s internal audit leaders are as swamped as any CFO. Much like the finance chief, today’s internal auditors have also seen their traditional roles morph away from just crunching numbers to being asked a key question: “What’s coming next?” said Andrew Struthers-Kennedy, global leader of Protiviti’s internal audit and financial advisory practice.

International

PH seen struggling with shortage of accountants [Philippine Daily Inquirer]
We were unable to find a verified reputable source to this so take it with a grain of salt. We do know the Philippines is approaching an accountant shortage of some kind, for now it mainly affects their own firms and businessness, not the American, British, and Australian accounting firms that are using this talent.
The Philippines is experiencing a shortage in accountants, a predicament that will likely worsen given the declining number of students taking accounting-related courses coupled with other emerging trends that seem to be taking a chunk out of the talent pool of traditional accounting firms. Marvin Galang, co-founder of financial mobile app built for freelancers called Beppo, said on Friday that they found alarming the results of a survey showing that there is a 41-percent decline in student enrolment in local accounting programs. “Subsequently, we also saw a decline of 35 percent in the number of [certified public accountant] examinees from 2019 to 2023,” Galang said during a conference focused on the local accounting industry.

Kelly Partners furthers its US exposure with new partnership [Accounting Times]
Kelly Partners Group (KPG) and FRSCPA, a Florida based company, announced the beginning of their partnership through executed agreements, based on a purchase price of AUD$7.6 million. FRSCPA is a public accounting firm “committed to providing its clients with high quality, professional accounting, tax and consulting services in a manner that incorporates sound professional business and personal ethics”. A wholly owned subsidiary of KPG will acquire 50.1 per cent of the business, with the remaining 49.9 per cent held by all four existing equity partners of the business under KPG’s partner-owner driver model.

Talent

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Firm Watch

MHM Changes Name to CBIZ CPAs P.C. [Mayer Hoffman McCann] Mayer Hoffman McCann P.C. (MHM), based in Kansas City, Mo., announced today that it is changing its name to CBIZ CPAs P.C., effective immediately. CBIZ CPAs P.C. (CBIZ CPAs) is an independent CPA firm with 35 offices nationwide that provides audit, review and attest services, and works closely with CBIZ, a leading national provider of financial, insurance and advisory services, but is a separate legal entity.

Private Equity

The rise of private equity in accounting: Not just for large firms anymore [Thomson Reuters] Private equity (PE) firms typically invest in businesses with the goal of enhancing the value of the business (and thus the investment of the PE firm) over a period of time before exiting through a sale or public offering. Historically, PE investment was concentrated in certain select industries such as technology, healthcare, and manufacturing. Over the past decade, however, there has been a marked increase in PE interest in professional services, including tax & accounting firms. In fact, August 2021 is seen as the landmark year of PE firms’ splash into the accounting sector with the announcement by TowerBrook Capital Partners that it was investing in EisnerAmper, a 3,000-employee global tax & accounting firm. In less than three years, PE firms have bought stakes in five of the top 26 accounting firms, and this trend is predicted to continue, which can be attributed to a few key factors.

Big 4

Deloitte: Enterprises Face Gen AI Scaling Challenges [Technology Magazine]
The survey, based on responses from 2,770 director to C-suite level executives across 14 countries, shows that while organisations are committing more resources to Gen AI, they are struggling with scaling and demonstrating value. The report, The State of Generative AI in the Enterprise: Now Decides Next, finds that 67% of respondents are increasing their Gen AI investments due to perceived value. However, this commitment is offset by obstacles including data quality issues, investment costs and regulatory uncertainties. Jim Rowan, Applied AI leader at Deloitte Consulting LLP, states: “We have arrived at a pivotal moment for Generative AI, balancing leaders’ high expectations with challenges such as data quality, investment costs, effective measurement and an evolving regulatory landscape.”

Deloitte Legal Research Platform ‘Moonlit’ Spins Out [Artificial Lawyer]
Amsterdam-based Moonlit, a genAI legal research platform, has spun out of Big Four firm Deloitte to go its own way and compete in the legal data market with a focus on the EU. Dirk-Jan van den Broek, Co-Founder of the now independent Moonlit, who is a class action lawyer and also the founder of another legal tech company, ClaimShare, told Artificial Lawyer the business had spun out because ‘case law and legislation research and analysis are not a core business for Deloitte and Moonlit will thrive better as an independent tool’. They have also received fresh investment, including from Curiosity VC. Van den Broek told this site he could not reveal the amount, but added that ‘we can disclose that Deloitte is a launch partner and supporter of the platform’.

PwC loses major client Bank of China amid regulatory probe [Reuters]
Auditor PwC has lost its largest mainland China-listed client, Bank of China, to rival EY, adding to an exodus of clientele amid a regulatory investigation into its work on troubled property developer China Evergrande Group. State-owned Bank of China had as recently as March stated plans to reappoint PwC as its auditor for 2024 but in a filing late on Monday said it plans to appoint EY. The decision will be submitted for shareholder approval, it said. PwC, once the leading auditing firm in China, declined to comment.

KPMG’s Andrew Yates in his bonus era [Financial Review]
In quieter moments, you reckon this country’s big four consultants and accountants rue the day they first learned the name Peter Collins? PwC’s tax-leaking wrecking ball swung into his firm, but it’s the second-order damage that means things will never be quite the same in the professional services game. Take the recent necessary and embarrassing public discourse about the take-home pay of its top strivers. Particularly those exposed to advising government and lining their pockets with taxpayer dollars. Some are doing better than others in opening the kimono. This month, KPMG put out its 2024 Impact Plan. It’s one for the true-believers, running to some 76 pages, full of wise-sounding jargon and vague ambition. But on page 22, the firm proudly announces it’s the “first Australian Big 4 partnership” to promise to publish executive pay every year. It’s anonymised and in bands, but baby steps. Good for KPMG. That’s except the chief executive’s pay. KPMG’s report shows Andrew Yates took home $2.47 million in FY23 and $2.44m in FY24.

Tax

The reality of Kamala Harris’ plan to tax unrealized capital gains [Axios]
Silicon Valley was burning up the socials this week, after learning that Kamala Harris has tacitly endorsed a tax on unrealized capital gains. Lots of what was shared was inaccurate. Reality check: This only would impact a small subset of America’s wealthiest people, and most tech founders and investors would be spared. What to know: Harris didn’t release a new tax plan. Instead, her campaign said it agrees with a series of items in President Biden’s last budget proposal, the most relevant of which were nonstarters in Congress and didn’t become law. This includes the new tax on unrealized capital gains.

There Is No Kamala Harris Golf Tax—But Maybe There Should Be One [Forbes]
There has been much made on social media in the last twenty-four hours of a supposed proposal by the Harris administration for a 20% excise tax on all things related to golf. As with so many things on the internet, it appears to have no basis in fact and originates from a parody account on Twitter/X. However, golf courses carry with them myriad externalities, the cost of which are born by society writ large: from environmental impacts like water consumption, chemical fertilizer runoff, habitat disruption and soil degradation to waste generation and the taking up of valuable real estate. While the Harris administration may have no plans to implement a golf tax—it may not be a bad idea.

Google Gets Tax Deduction for Most of California Journalism Deal [Bloomberg Tax]
Most of the $242.5 million Google agreed to spend on journalism initiatives and artificial intelligence in California to avoid possible taxes or fees will be tax deductible. Alphabet Inc.’s Google committed to spend that much over five years to boost journalism in California under an agreement reached this week with Assemblymember Buffy Wicks (D). Of that, $130 million is meant for a journalism fund hosted by the University of California, Berkeley Graduate School of Journalism.

No tax on tips fires up Nevada hospitality workers: ‘I want that!’ [The Guardian]
Kristine serves gamblers playing countertop video poker screens at the center bar of Las Vegas’s Ellis Island casino. She declines to share her last name for privacy reasons, but is not timid about her support for Donald Trump when asked about his campaign promise to end federal taxation on tips. “I want that!” Kristine says as she fulfills cocktail waitresses’ orders. “Our tip compliance is too high. They take so much from our paycheck.” Tip compliance – the tax process for expected earnings from tips – has become a political football in Nevada, with federal lawmakers from both parties piling in to co-sponsor bills or present their vision for how tax exemption for tips should work.

Owner of North Carolina High Performance Car Business Pleads Guilty to Employment Tax Crime [Department of Justice]
North Carolina businessman George William Taylor Jr. of Wilmington pled guilty today to not paying more than $2 million in employment taxes and not filing employment tax returns. According to court documents and statements made in court, Taylor, owned and operated National Speed, a high-performance automotive services business. As the chairman and president of National Speed, Taylor was responsible for withholding Social Security, Medicare, and income taxes from employees’ wages and paying those taxes to the IRS. From 2014 through 2021, Taylor withheld the taxes, but did not pay those withholdings over to the IRS, nor did he file the necessary employment tax returns. During the same period, he also did not pay the employer’s share of those taxes to the IRS. In total, Taylor caused a tax loss to the IRS of $2,272,072.

Phil Liberatore, CPA and IRS Advocate, Reports IRS Shortcomings in Addressing Identity Theft and Backlogs [EIN Presswire]
Phil Liberatore, CPA and IRS advocate, says the Internal Revenue Service (IRS) is failing to assist victims of identity theft with receiving their tax refunds. This is according to a new report from National Taxpayer Advocate Erin Collins. The midyear report, released recently, also highlights concerns over misleading statistics regarding the IRS’s phone call response rates. “The delays in resolving identity theft cases are unacceptable,” said Liberatore. “Taxpayers who are victims of identity theft are already going through a stressful experience. To then have to wait nearly two years for resolution adds unnecessary hardship. The IRS needs to prioritize these cases to restore trust in the system.”

Municipal Messes

Mayor Frank Brocato gives perplexing audit update [Alabama Today]
For months, the City of Hoover has attempted to hide the details of its ongoing forensic audit while evading questions about its annual audit. At the August 05, 2024 city council meeting, Mayor Frank Brocato read a statement about the status of the two audits. The forensic audit was first reported only after it came up during an unrelated hearing. On the one hand, the mayor sought to downplay the need for the forensic audit, saying that under his watch, the city has “consistently received clean audit opinions.” On the other hand, the mayor stressed that there were concerns so worthwhile that the city brought in the additional accounting firm and that the current CFO, Jennifer Cornett, and her team continue to address the problems. The Mayor explained, “several of them have already been addressed. Mrs. Cornett and her staff are working long hours to correct the others.”

The post Friday Footnotes: EY Shrinks Its Audit Practice; Andersen Going Public; Someone’s Losing a CPA License | 8.23.24 appeared first on Going Concern.

Why 80%? Because many of the employers caught up in this flood of dubious ERC claims did so at the urging of what the IRS calls “aggressive promoters” — the cottage industry that popped up around the many pandemic-era credits and quickly overtook those people calling you about your car’s extended warranty as the most obnoxious of unsolicited calls. Even we got emails from these people promising huge payoffs if our business applied for ERC credits, credits that these non-CPA hawkers of tax credits swore were basically free money. Paycheck Protection Program (PPP) loans were actually free money, ERC not so much and using the PPP free money glitch disqualified employers from double dipping on ERC. Anyway, employers that fell for these promises would pay a fee to the “aggressive promoter” who urged them to file, a payment due prior to seeing any money from the IRS. Thus the IRS is being unusually kind and not requiring voluntary disclosers to pay back the full amount they received in erroneous ERC. You can bet they’ll be extracting that pound of flesh from whatever “aggressive promoters” they can nail to the wall.

Many employers that filed ERC claims — not only the ones suckered by smooth-talking telemarketers but legitimate, qualified employers — are still waiting on payments.

The voluntary disclosure program was strictly for employers who’d seen payouts as a way for them to pay it back. The voluntary withdrawal program was for those still waiting on ERC claims to be paid out, including employers with checks from the IRS they hadn’t yet cashed, and came with no penalty at all. If a voluntary withdrawal was accepted, the IRS would pretend it never happened (“Claims that are withdrawn will be treated as if they were never filed”) and everyone would go on with their lives.

ERC had very specific requirements, requirements that many filers didn’t actually meet. As its name suggests, Employee Retention Credits were meant to encourage struggling employers to keep people on staff in the early days of lockdowns. In order to qualify an employer had to pay qualified wages to some or all employees after March 12, 2020, and before January 1, 2022.

Generally, businesses and tax-exempt organizations that qualify are those that:

• Were suspended by a government order due to the COVID-19 pandemic during 2020 or the first three calendar quarters of 2021, or
• Experienced the required decline in gross receipts during 2020 or the first three calendar quarters of 2021, or
• Qualified as a recovery startup business for the third or fourth quarters of 2021

By the time the IRS issued a moratorium on processing ERC claims in September 2023, they’d discovered thousands of claims that failed to meet the basic criteria for the ERC program such as A) being a business and B) having employees on the payroll. But that still left plenty of borderline cases that weren’t immediately clear as legit or not. This past June, the agency announced it had digitized and analyzed about one million ERC claims representing more than $86 billion and was making progress on the difficult task of sorting ERC claims into fraud, maybe bullshit, and probably OK categories. They identified some common red flags that were a recurring theme in many ERC claims destined to be rejected or worse:

• Essential businesses during the pandemic that could fully operate and didn’t have a decline in gross receipts – The most basic of requirements to qualify for ERC. Essential businesses didn’t qualify because their operations weren’t suspended or disrupted by government orders. “Modifications that didn’t affect an employer’s ability to operate, like requiring employees to wash hands or wear masks, doesn’t mean the business operations were suspended,” said the IRS.
• Business unable to support how a government order fully or partially suspended business operations – If everyone could stay home and continue working, the IRS doesn’t consider the business disrupted.
• Business reporting family members’ wages as qualified wages. – As it describes. Wages paid to related individuals and members of the same household aren’t qualified wages for the ERC.

And as mentioned above, another flag for a possibly bad ERC claim is businesses using wages already used for PPP loan forgiveness. They can’t claim ERC on wages they reported as payroll costs to get PPP loan forgiveness.

Now imagine used car salesmen trying to explain all these rules to some rube in Nebraska who was just trying to keep his business afloat in 2020.

Leading up to the end of the voluntary disclosure program on March 22, the IRS pushed out many reminders that the window to admit your business took ERC money it wasn’t entitled to was quickly closing. Hurry up and disclose or it’s gonna hurt! This is your last chance or we’re gonna bend you over! Don’t make us do it!

Well, they’ve opened the window again. Announced August 15, Voluntary Disclosure Program v.2 is live and open until November 22. Here’s what they said:

The Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) will run through November 22 and allow businesses a chance to correct improper payments at a 15% discount and avoid future audits, penalties and interest. During the first disclosure program that ended in March, there were more than 2,600 applications from ERC recipients that disclosed $1.09 billion worth of credits.

To underscore the importance of participating in the Voluntary Disclosure Program, the IRS also announced it plans to mail up to 30,000 new letters to reverse or recapture potentially more than $1 billion in improper ERC claims. Thousands more mailings on additional questionable payments will be made in the fall.

“The limited reopening of the Voluntary Disclosure Program provides an opportunity for those with improper claims to come in ahead of IRS compliance work and get a discount on repayments,” said IRS Commissioner Danny Werfel. “This is especially important given increasing IRS compliance actions involving bad claims, many of them are the result of aggressive marketing tactics to lure unsuspecting businesses into claiming the complex credit. This provides a final window of opportunity for those misled businesses to make adjustments and avoid future compliance action by the IRS.”

2,600 applications is a lot but compare that to the 1.4 million open claims the IRS had in June. After the September moratorium, the IRS was seeing more than 17,000 ERC claims come in every week.

“The push by promoters flooded the IRS with questionable ERC claims, which clogged our systems and slowed work,” said Werfel. “We recognize well-meaning businesses are caught up in this, and we are taking important steps to help them. This includes reopening the Voluntary Disclosure Program as well as getting more payments out to qualifying businesses.”

As of May, IRS Criminal Investigation has initiated 450 criminal cases, with potentially fraudulent ERC claims worth nearly $7 billion. 36 investigations have resulted in federal charges so far, with 16 investigations resulting in convictions and seven sentencings with an average sentence of 25 months.

IRS reopens Voluntary Disclosure Program to help businesses with problematic Employee Retention Credit claims; sending up to 30,000 letters to address more than $1 billion in errant claims [IRS]

The post The IRS Is Trying to Get ERC Employers to Tell on Themselves Again appeared first on Going Concern.

The Best Places to Work for Disability Inclusion list belongs to Disability:IN, a nonprofit “committed to empowering business to achieve disability inclusion and equality.”

The Disability Equality Index covers Culture & Leadership, Enterprise-Wide Access, Employment Practices, Community Engagement, Supplier Diversity and Responsible Procurement (unweighted). They explain it more in the FAQ:

To make it on the list, an employer needs to score 80 or above on the self-submitted assessment that asks about things like diversity policies, accommodations for people with disabilities, and if anyone in leadership has made a public statement in support of people with disabilities in the last year such as a speech or being quoted in an article. Disability:IN corporate partners do not have to pay to submit for the list — all firms listed below are corporate partners, Forvis and Wipfli are too but either didn’t make the list or chose not to submit — and the fee for non-partners is $900 for the US alone or $2,300 if they want to submit for all eight countries in which D:IN has an index.

All accounting firms on the 2024 list scored 100 with the exception of Crowe at 90:

• Crowe (90)
• Deloitte (100)
• EY (100)
• Grant Thornton (100)
• KPMG (100)
• PwC (100)
• RSM (100)
• Withum (100)

The group notes that “a score of 100 on the Disability Equality Index does not indicate or imply perfection.”

God bless whoever had to fill this questionnaire out because boy, it’s a lot. Here’s the Excel sheet if you want to check it out.

The post These Firms Scored High in Disability Friendliness appeared first on Going Concern.

Because she doesn’t start until October, her KPMG profile is still live:

Helluva resume there. Harvard Law School, working for President Biden back when he was just Senator Biden, US Department of Housing and Urban Development, Special Assistant to Obama for Justice and Regulatory Policy at the White House…and KPMG.

Vanguard couldn’t be more excited. “Tonya is an accomplished lawyer and trusted business leader who brings extensive experience in the public and private sectors,” said Vanguard Chief Executive Officer Salim Ramji. “She has spent her career championing access and transparency for individuals across a range of issues and amid increasingly complex legal and regulatory landscapes. We are pleased to add her counsel, business acumen, and policy expertise to further our mission of giving individual investors the best chance for investment success.”

For her part, Tonya is “thrilled” herself. “I’m thrilled to join Vanguard, a firm with a rich history of helping everyday investors get a fair shake,” she said. “For nearly 50 years, Vanguard has helped families save for their education and retire better with a strong ethos of integrity and commitment to client success. I welcome the chance to work with Vanguard’s talented and purpose-driven management and legal teams to help propel the next 50 years of the firm’s impact on helping investors reach their goals.”

Vanguard Announces Tonya T. Robinson as General Counsel [Vanguard]

The post Vanguard Poaches Someone From KPMG and Issues a Press Release appeared first on Going Concern.

KROST may not be a well known headline-grabber and they’ve only got about 100 professionals on staff but they’ve been around since 1939. The firm you’ve never heard of until now provides accounting, tax, and business consulting services mostly to the hospitality, technology, financial services, manufacturing, real estate, sports and entertainment, nonprofit sectors.

Both firms involved in this union were quite transparent about their reasons for joining forces.

“The profession is evolving,” said Paren Knadjian, Principal, M&A and Capital Markets at KROST. “To stay relevant and, more importantly, to continue to provide a wide array of evolving services to our clients, we need the additional expertise and capital that a firm like EisnerAmper can provide. We believe they are the ideal partner to help us achieve that goal.”

As you may remember, EisnerAmper was the first big firm to bring in private equity at a time when such a deal was considered revolutionary. That time was only three years ago, believe it or not. Since then, they’ve been busy gobbling up small firms.

With the KROST deal they’ll gain another foothold in the Southern California market (they merged in La Jolla’s Lindsay & Brownell in 2022). “It’s strategically critical that we expand our presence in America’s second largest city,” said Jay Weinstein, EisnerAmper Vice Chair of Industries and Markets. “And I can’t think of a better partner than KROST, which has maintained a standard of excellence for more than eight decades. We warmly welcome them to the EisnerAmper family.”

That’s all well and good but when are you gonna give us another FORVIS? Think big, Eisner.

Relevant r/accounting discussion: EisnerAmper was the first large accounting firm acquired by private equity, back in 2021. For those who have worked at Eisner, what changes have taken place since PE took over?

The post EisnerAmper Snags Itself Another Small Firm appeared first on Going Concern.

We knew this was coming. In July, BDO put out a damage control press release that used words like “continuous improvement” and promised the firm implemented “multiple strategic initiatives” to strengthen audit quality and build trust and confidence in the capital markets. In other words, “We really bungled this and the one before it wasn’t great either but pinky swear, we’re doing better. Trust us.”

So what’s the total damage? 25 out of 29 audits inspected scored Part I.A. deficiencies.

Oftentimes, and rightfully, we criticize the PCAOB for excessive paper-pushing and nitpicking but in this case, one issuer restated its financial statements to correct misstatements and in another audit, an issuer revised its report on internal controls over financial reporting (ICFR). In both cases, BDO revised its opinion and in the latter case, the firm expressed an adverse opinion. 2022 and 2021 also had some mess to be cleaned up:

In addition, in connection with our 2022 inspection procedures for two other audits, the issuer corrected a misstatement in a disclosure or an omission of a required disclosure in a subsequent filing. Our 2022 inspection procedures also involved one audit for which the issuer, unrelated to our review, revised its report on ICFR and the firm revised its opinion on the effectiveness of the issuer’s ICFR to express an adverse opinion and reissued its report.

Our 2021 inspection procedures involved one audit of an issuer that was formed by a merger between a non-public operating company and a special purpose acquisition company (SPAC) for which the issuer, unrelated to our review, restated its financial statements to correct a misstatement and the firm revised and reissued its report on the financial statements.

The most common Part I.A deficiencies in 2023 related to identifying controls related to a significant account or relevant assertion, performing substantive testing to address a risk of material misstatement, and testing the design or operating effectiveness of controls selected for testing. The Part I.B deficiencies in 2023 related to consideration of fraud, retention of audit documentation, audit committee communications, risk assessment, the firm’s audit report, management communications, critical audit matters, and Form AP.

We propose the PCAOB add a new data point to its inspections and public reports: What percentage of audit work is performed offshore. Hell, throw in what kind of work it is, too.

Revenue and related accounts tripped BDO up the most followed by inventory, business combinations, and finally goodwill and intangible assets. At least they’ve gotten better at goodwill.

We don’t need to cover each deficiency but Issuer A is worth a look, a health care client that went on to restate its financial statements in connection with the PCAOB inspection:

With respect to Revenue:

The issuer recorded revenue at the time its services were provided to its customers. The firm did not perform any substantive procedures to test whether the performance obligation had been fully satisfied before revenue was recognized. (AS 2301.08)
The firm used information produced by the issuer in its testing of transaction prices, but did not perform any procedures to test, or test any controls over, the accuracy and/or completeness of certain of this information. (AS 1105.10)

With respect to Warrants:

During the year, the issuer issued warrants that were recorded as liabilities. The firm did not identify and evaluate misstatements in the fair value measurement of these warrants. (AS 2810.30)

In connection with our review, the issuer reevaluated its accounting for these warrants and concluded that misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements, and the firm revised and reissued its report on the financial statements.

In its response to the PCAOB inspection, BDO linked their 2023 Audit Quality report and said the “numerous investments” they’ve made in improving audit quality can be found there.

Better luck next time.

The full 2023 PCAOB inspection of BDO USA, P.C. can be found here [PDF]

The post BDO Aced Its 2023 PCAOB Inspections! JK, It Was F**ked appeared first on Going Concern.

Talent

The future of audit talent [Thomson Reuters]
The landscape for audit talent is shifting significantly. Projections indicate a growth in employment opportunities for accountants and auditors, while roles focused on bookkeeping and data entry are expected to decline. This shift is largely due to the integration of AI and automation technologies, which streamline routine tasks and open up opportunities for auditors to engage in higher-value work. This transformation in the job market demands a workforce that is adept at leveraging technology for more complex and strategic tasks.

To Recruit More CPAs, Show Them What’s Possible [FEI]
Auditor, chief financial officer, data scientist, regulator, entrepreneur. Those are some of the many careers available to a certified public accountant (CPA). Unfortunately, however, interest in the accounting profession is waning. And with the stability of capital markets and the business world overall dependent on a thriving profession, the time to act is now. We need to come together as public accounting firms, public and private companies, industry associations and CPA societies to sell a career in accounting differently. We need to create greater awareness for the work of a CPA and the impact it has. And that starts with storytelling.

Audit

BDO sinks to bottom of US audit quality league table [Financial Times]
There are still “unacceptable” numbers of flaws in the work carried out by the largest US audit firms, the industry’s regulator said on Thursday, after its inspections showed a surging rate of deficiencies at mid-tier firms BDO and Grant Thornton in particular. At BDO, 86 per cent of audits inspected by the PCAOB were found to be deficient, meaning that the firm had failed to collect enough evidence to support at least part of its audit conclusion. At Grant Thornton, a little over half of audits inspected contained flaws.

Big Four Audit Shortfalls Stabilize, Latest Inspections Show [Wall Street Journal]
PricewaterhouseCoopers and Deloitte experienced greater deficiencies in their audits of public companies’ 2022 financial statements compared with the previous year, while the overall rate of Big Four accounting firms’ shortcomings stabilized, according to the latest annual inspection reports. The Public Company Accounting Oversight Board last year inspected 230 audits conducted by the Big Four firms in the U.S.—Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers—up from 215 a year earlier. The firms collectively had an average deficiency rate of about 26%, the same as a year earlier. PCAOB Chair Erica Williams said the findings from the inspections released Thursday, which covered audits of 2022 financials, were still unacceptable. The Big Four averaged a rate of 20% over the previous five years, reports show.

PwC fined £15m for failing to report suspected fraud at City firm [The Guardian]
The UK financial services watchdog has fined PwC a record £15m after audit staff failed to tell regulators they suspected fraud at a City firm that collapsed in 2019, leaving more than 11,000 investors almost £240m out of pocket. It marks the first Financial Conduct Authority (FCA) fine against an auditor, and comes three months after PwC was hit with a £4.9m separate penalty by the Financial Reporting Council over the handling of London Capital & Finance’s accounts. LC&F collapsed after taking about £237m from 11,600 investors. Its mini-bonds promised stellar returns of up to 8% a year, but put only a small amount of cash into safe interest-bearing investments. The rest was funnelled into speculative property developments, oil exploration in Faroe Islands and even a helicopter bought for a company controlled by LC&F. The collapse in January 2019 led to reprimands for the FCA and a criminal investigation by the Serious Fraud Office, which is still open. The latest fine, the largest ever imposed on PwC in the UK, draws a line under the FCA’s investigation into the affair.

AI in Accounting

Navigating AI challenges for tax research [Thomson Reuters]
While the future of AI in tax research is certainly promising, it’s important to understand the benefits and challenges to successfully harness the power of AI for a competitive edge. This blog delves into the concerns associated with AI adoption in professional settings and offers strategies to mitigate them, ensuring a smooth transition into an AI-powered future.

International Happenings

Consultants allegedly advising on avoiding Labour tax clampdown [Consultancy.uk]
We shared the original Guardian article about this but Consultancy.uk just got around to writing it up so ICYMI…
Stuart Clifford, a principal at Baker Tilly Isle of Man, said to an undercover reporter at the event, “My last one I did of these – £30 million… [The client] said … ‘That’s my kids’ money. So let’s protect it from IHT today.’ [The] day he got it – £30 million [went] into [the offshore product]. He’s not doing anything funky. He’s not paying a lot for it, that’s just going through investment managers and what have you.”

Deloitte’s Adrian Mills and Matt Lawson go independent [AdNews]
Deloitte Digital down under is changing things up and these two dudes are outta there.
Admen Adrian Mills and Matt Lawson will establish an independent agency and formally separate from Deloitte Digital from mid September. The agency will be called ATime&Place and will deliver advertising work for top tier brands, including Deloitte. Deloitte Digital is re-balancing its offering portfolio to focus on customer and brand strategy, integrated customer experience design, marketing technology implementation and marketing, sales and service transformation. Adrian Mills and Matt Lawson joined Deloitte Digital in 2017 from McCann and went on to establish creative, brand and advertising services.

EY, KPMG benefit most from PwC China’s regulatory woes [Reuters]
Ernst & Young (EY) and KPMG have snapped up over half of PwC’s corporate clients in China that have fled the market’s leading accounting firm as it faces a regulatory probe, filings show. Chinese authorities have been investigating PwC’s role in auditing China Evergrande Group after the securities regulator accused the troubled property developer in March of a $78-billion fraud. PwC audited Evergrande for almost 14 years until early 2023. Regulators have also asked several large state-owned clients of PwC to drop the auditor since at least April. “Compared to previous years, what we’re seeing this year is certainly an unusual client exodus from PwC,” said Fan Zhongwen, an accounting professor at City University of Hong Kong.

News

Deloitte replaces Atos as Olympics lead tech integrator for LA 2028 [SportsPro]
Now, starting with Milan Cortina 2026, Deloitte will be responsible for managing the entire Olympic IT operation, managing equipment and resources from multiple tech vendors at the Technology Operations Centre (TOC). It will design, build, implement, operate and secure the IT infrastructure, key applications, and cybersecurity provisions, building technologies that can be reused and adapted to the needs of individual Olympic and Paralympic Games. Everything from accreditation and scheduling through to results and team management software will come under its expanded remit.

CPA firm says city’s audit not ready to present [Natchez Democrat]
More muni mess.
The Natchez Mayor and Board of Aldermen expected to hear results from its FY 2023 audit, but that didn’t happen. Carr Hammond, CPA and managing partner at Silas Simmons, the accounting firm the city contracts with for its audits, was not available to attend Tuesday’s board meeting, but sent word to Mayor Dan Gibson that the audit was not ready to present. “We will not be satisfied with any audits late in this administration again and that has been made aware to all parties involved,” Gibson said.

The post Friday Footnotes: BDO Blows It; PwC Blazes a Trail in New Audit Fines; Using AI For Tax Research | 8.16.24 appeared first on Going Concern.

Courtesy Chicago’s WGN, the food service director for Harvey School District 152 in the southern burbs pleaded guilty last Friday to stealing $1.5 million of food — mostly chicken wings — under the cover of providing meals to students learning remotely at the height of COVID. She’s been sentenced to 9 years behind bars where she probably won’t see nary a wing.

Early last year, Cook County prosecutors accused Vera Liddell of placing unauthorized orders with the district supplier Gordon Food Services from July 2020 to February 2022. During this time, students were learning from home but could still pick up take-home meals provided by the district. Ms. Liddell would have gotten away with it too were it not for the meddling school district business manager who audited the departments in January 2022 and found food service had gone over its annual budget by $300,000. In addition, the bone-in chicken wings stood out as odd because students aren’t usually served food with bones. Shoulda stuck with nuggets, lady.

Gordon Food Services employees told investigators they were familiar with Liddell “because of the massive quantities of chicken wings she would purchase,” reported WMAQ last year.

Although we don’t know for sure which of the many chicken wings Gordon Food Services offers were involved in this heist, simple math tells us that 11,000 cases of the above pictured wings equals $1,231,890. We may have cracked the case (no pun).

The question on everyone’s mind (after “is it a slow news day at Going Concern?”) has to be “So what happened to all those chicken wings?” FOX 5 DC has your back:

Suburban School Worker Stole 11K Cases of Chicken Wings in $1.5M Embezzlement Scheme: Court Docs [NBC 5 Chicago]

The post Covid Lockdown Helped Conceal Lunchlady’s Massive Chicken Wing Fraud appeared first on Going Concern.

Partners at KPMG Saudi Levant and KPMG Lower Gulf have voted overwhelmingly in favor of a proposed integration of their businesses. The integration will result in the establishment of a new limited liability partnership and, once implemented and necessary regulatory approvals obtained, will see a collective KPMG business comprising over 5,000 employees operating across Saudi Arabia, Jordan, Lebanon, Iraq, the United Arab Emirates and Oman.

OK, whatever. But then there’s this bit:

The proposed integration is consistent with KPMG’s Global Collective Strategy, which includes the clustering of member firms across the network. Greater integration brings a number of benefits to clients, people and the communities in which KPMG operates. Importantly, it underpins KPMG’s commitment to greater consistency and quality albeit continuing to service clients through separate legal entities that have operated in the respective markets.

In May, KPMG UK and KPMG Switzerland announced they were hooking up to form a $4.4 billion firm. So that’s two KPMG hookups in twice as many months.

To rehash what KPMG UK CEO Jon Holt said at the time of the UK/Swiss nuptials: “This marks a historic moment for both firms. We will be stronger as one combined firm and together we will have the scale to significantly enhance our ability to deliver great outcomes for our clients both internationally and within our domestic markets. Merging brings huge benefits for our clients, our people, and our partnership and means we can now grow faster, be more profitable and invest together to create new services in a sustainable way.”

Financial Times had spilled the beans about the UK/Switzerland mashup some months before it was voted on and “overwhelmingly” endorsed by the two firms’ partners. In their December 2023 piece, they said KPMG executives were hoping to “boost growth and profits at the smallest of accounting’s Big Four.”

And Jon Holt said in a statement to FT: “Bringing together our two firms would give us more collective power to invest, build new services for our clients and provide our people with significant global career opportunities. Together, we would grow faster, be more profitable and do so in a sustainable way.”

Is this KPMG’s big picture global plan?

The post Another KPMG is Merging With KPMG appeared first on Going Concern.

Yet another accounting firm has reported a data breach, this time Heier Weisbrot & Bernstein of Gibbsboro, New Jersey and the details are a bit scarier than just bad actors caught digging around in the firm’s files. In this case, an unauthorized someone or someones got into HW&B’s tax software and attempted to file fraudulent tax returns.

This is what they said in a consumer notification filed with the attorney general of Maine on August 7 (emphasis ours):

Heier Weisbrot & Bernstein, LLC recently completed its investigation of an incident involving unauthorized access to a certain computer system in its network. On June 27, 2024, Heier Weisbrot & Bernstein, LLC detected an attempt by an unauthorized actor to file fraudulent tax returns for a small number of clients. The fraudulent returns were identified and reported to the IRS to be remedied. Heier Weisbrot & Bernstein, LLC worked with the IRS to ensure that any other attempted fraudulent returns are not processed.

Heier Weisbrot & Bernstein, LLC launched an investigation with the assistance of a third party cybersecurity firm. The investigation found that an unauthorized actor accessed Heier Weisbrot & Bernstein, LLC’s tax software between approximately June 22 and June 26, 2024. The files accessible in the tax software contained the name and one or more of the following for seven Maine residents: Social Security number, driver’s license number, and financial account number(s) used for direct deposit of any tax refund if provided to Heier Weisbrot & Bernstein, LLC. For certain of the individuals, the investigation could not conclusively determine whether their information was accessed or acquired by the unauthorized actor. Heier Weisbrot & Bernstein, LLC completed its analysis of the personal information contained in its tax software on July 29, 2024.

According to the full consumer communication filed with the Vermont attorney general [PDF], HW&B is offering a year of identity monitoring services through IDX. These services include: “one year of credit and CyberScan monitoring, a $1,000,000 insurance reimbursement policy, and fully managed identity theft recovery services.”

The firm went on to “strongly encourage” recipients to enroll in the IRS’ Identity Protection PIN (“IP PIN”) program and directed them to IRS.gov/IPPIN to do so.

Added the firm:

We apologize for any inconvenience this may have caused. We have and will continue to take steps to enhance the security of our computer systems to help prevent events such as this from occurring in the future.

See our previous coverage of accounting firm data breaches, including biggies at EY and PwC, here.

The post Hackers Tried to Help This Firm Get Through Their Tax Return Backlog, Fraudulently appeared first on Going Concern.

EY Australia reported (unaudited) revenue of $2.81 billion ($1.86 billion USD) in FY24, down from $2.97 billion ($1.97 billion freedom bux) in FY23. For the mathletes counting along at home, that’s a 5.5% hit.

It was, said EY, “a year marked by challenging market in slowing economy.” And also that whole thing with PwC blowing up the consulting business over there because they wanted to double dip but let’s not give that dead horse yet another punch.

Unfortunately we can’t compare service line performance from FY23 to FY24 because the firm reorganized the business. Some parts of the risk business moved from consulting to assurance and parts of people advisory moved to consulting. All EY said in the press release is that the assurance business “saw strong growth” and tax “experienced another solid year.” And provided these numbers:

Revenue for the firm’s Assurance service line reached $0.71b, while Tax delivered $0.61b. Despite Consulting trending downwards, its revenue was $1.04b in FY24. Its Strategy and Transactions service line delivered $0.45b.

On hiring and partner promotions in FY24 EY said:

In the last fiscal year, EY Australia appointed 53 new partners, including 31 promotions to partner and 22 new partners hired. The firm also appointed 20 associate partners (including 12 promotions and 8 hires) and hired 658 graduates. Of newly promoted partners and associated partners, 32 per cent and 50 per cent are women, respectively.

“Notwithstanding the very tough market conditions, and a heightened focus on professional services more broadly, we’re extremely proud of what we’ve accomplished and thank everyone for their contribution,” said EY Regional Managing Partner and CEO Oceania David Larocca.

He also mentioned last year’s scathing culture report that was prompted by an auditor being found dead at the Sydney office in 2022. “A year on from the release of the EB&Co. report, we’ve made strong progress addressing the recommendations we accepted. We will continue to be transparent about how we’re progressing in our annual Value Realised Scorecard,” he said. “We acknowledge, however, that transformative culture change isn’t delivered overnight – nor will it ever be ‘job done.’ It remains a long-term, continuous investment to ensure we build upon a diverse, respectful workplace where our people feel they can belong, perform and thrive.”

Just a few months ago, down under EY’s culture was in the news again. More on that below:

Now we really can’t wait to see those global numbers!

EY Australia announces 2.81 billion in revenue, down 5.5% from previous year [EY]

The post Revenue is Down More Than 5 Percent at EY Australia appeared first on Going Concern.

So in 2025, PwC is paying summer interns $30.75 – $40.75. The winter intern posts we found don’t have a pay range listed.

Here’s the YouTube video they linked if anyone would like to spend three minutes and 36 seconds getting elevator pitched on this internship.

On the topic of working in audit at PwC, we have a much better video coming up that we’re almost done editing. The original is a relic that will make you pine for Pizzarias and Surge.

The post This is What PwC is Paying Its Audit Interns in 2025 appeared first on Going Concern.

These figures come from NACE’s 2024 Internship & Co-op report and include responses from 283 organizations, not strictly public accounting. Return offers are down, acceptance rates are about the same, and conversation rates — that is, interns converting to entry-level hires — are slightly down.

Here’s what NACE had to say about these findings:

The drop-off in the offer rate—which is the lowest reported offer rate in five years—could reflect lower-than-anticipated hiring needs, just as employers’ projections for full-time hiring for 2023 graduates fell from nearly 15% in fall 2022 to about 4% in spring 2023. The lower rate could also indicate problems in selecting students for internships. In fact, employers who gave themselves high marks for converting interns to entry-level hires had a significantly higher offer rate—72%.

In addition, in-person interns received more offers than their hybrid counterparts, 73.2% versus 64.5%. The executive summary can be found here.

If you’re one of the unlucky few who didn’t get a return offer, let us know.

The post Chart of the Day: Interns Just Aren’t Getting FT Offers Like They Used To appeared first on Going Concern.

Who Cares

We were going to write about this new survey but someone in the comments was complaining about all the accountant shortage articles without any improvements being made to salaries and we kinda agree with them that it’s obnoxious. So here, take this tweet instead.

We propose that from now on, all accountant shortage surveys require respondents to share pay figures for roles they're struggling to fill. Also how much they pay offshore staff. pic.twitter.com/9tqNRXcPua

— Going Concern (@going_concern) August 8, 2024

Salaries

The 2024 Accounting Today Salary Survey [Accounting Today]
They don’t have their usual obnoxious paywall on for this one so you can actually read more than half a paragraph.
Compensation is always a hot topic in accounting, but it’s gotten even hotter these days thanks to the difficulty the profession has in attracting and retaining talent. One of the key contributors to the difficulty, according to recent studies — including an influential report from the National Pipeline Advisory Group — is the fact that entry-level salaries in the field are relatively uncompetitive when compared to those commonly available to business majors, and to those in other professions such as technology or finance. With that in mind, Accounting Today recently conducted its inaugural salary survey to create a snapshot of compensation levels across the country.

Audit

Sac State temporarily removes CapRadio audit as firm makes ‘corrections and clarifications’ [The Sacramento Bee]
Sacramento State on Thursday evening removed from its website an audit into Capital Public Radio’s finances, stating that one of several former board members described as having a “possible conflict of interest” was not a board member at the time of the transaction that was flagged. The university said it would post a corrected version of the audit “as soon as possible.” The university hired accounting firm CliftonLarsonAllen to conduct the independent forensic examination into CapRadio, which is an auxiliary of Sacramento State. That report was released publicly Monday, posted by Sacramento State to the school’s website. The 36-page report was then removed from the webpage.

Exclusive: China asks large state financial institutions to drop auditor PwC, say sources [Reuters]
Chinese regulators have in recent months asked several large state-owned clients of PricewaterhouseCoopers (PwC) to drop the auditor as it braces for penalties over its work for troubled property developer Evergrande, said two sources. The sources said the guidance was one of the main reasons for the client exodus from PwC, putting further pressure on the company that has responded by cutting staff numbers and halving the pay of some senior partners.

Firm Watch

Cherry Bekaert acquires accounting software specialist Kerr Consulting [Consulting.us]
Cherry Bekaert, a national accounting and consulting firm, has acquired Kerr Consulting, a Houston-based provider of accounting software managed services.

Accountancy firm rebrands to “bravely showcase our true identity” [Prolific North]
Sweet, can’t wait to see this powerful redesign! Bet it’s super disruptive and unique and truly speaks to the spirit of this firm.

Wut. Now this would have been brave:

Talent

Are you in the market for talent? Check out Accountingfly’s top remote accountants of the week. Great candidates like this person:

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Browse at your leisure with no obligation to hire and sign up for Always-On Recruiting to get a fresh batch of candidates in your inbox every week. More candidates can be found below:

Big 4

Netherlands Rejected Meat Tax Based on ‘Biased’ Report, Finds New Investigation [Green Queen]
A government-commissioned report calling a meat tax in the Netherlands “unfeasible” was biased, one-sided, and carried out poorly, according to a new investigation. The Ministry of Agriculture, Nature and Food Quality formulated the assignment to research firm Ernst & Young (EY) in such a way that the outcome was almost certain in advance. It stemmed from a 2020 petition in support of a meat tax, which was signed by more than 50,000 Dutch citizens. They argued that a per kilo levy of €2 for chicken, €4.50 for pork and €5.70 for beef would help curb meat consumption, leading to a reduction in greenhouse gas emissions.

One consulting firm has more Olympians than the others [Financial Review]
EY has more Olympians competing for Australia at Paris 2024 than the other three Big 4 firms.

KPMG U.S. Celebrates Third Annual Nationwide Day of Service, ‘Community Impact Day’ [KPMG]
“Community Impact Day brings our people together and gives us the opportunity as a professional services firm to make the difference by devoting our skills, resources and time to help transform our communities,” said Paul Knopp, Chair and CEO, KPMG LLP. “Our commitment to investing in our communities is ongoing and our extraordinary people are at the heart of this important work.” One way KPMG is continuing to evolve this day of service is by offering skills-based volunteer opportunities centered around the firm’s AI Impact Initiative. This CID, KPMG employees will be offering skills-based AI services to non-profit leaders to help them understand new capabilities and applications made possible by AI. The KPMG U.S. Foundation, in collaboration with KPMG HUB markets, will also contribute $2.7 million in community vitality grants in 21 U.S. markets to support organizations taking a holistic approach to addressing interconnected issues unique to each community.

Big four consultants’ ‘land and expand’ strategy hammered by scandals [Financial Review]
The value of work tacked on to federal government contracts with KPMG, EY, PwC and Deloitte crashed last financial year, after taxpayers were whacked with extensions worth more than $1 billion in the three years prior. The big four consulting firms secured about $900 million in work starting in 2022-23. Over the following year, the value of those contracts was extended by about $90 million, for a 10 per cent uplift.

KPMG aims to bolster tech consulting position in Rhino.AI deal [CFO Dive]
Big Four accounting and consulting firm KPMG is looking to accelerate its growth as a provider of technology consulting services with a stake in artificial intelligence startup Rhino.AI. “We very much see this as a growth engine for us,” Marcus Murph, head of CIO Advisory at KPMG, said in an interview. “There are still a tremendous number of large enterprises that have significant technology debt.”

PwC appoints Jennifer Mantini as Philadelphia office leader [Consulting.us]
Mantini is the first consulting partner to serve as head of the Philadelphia market, with all prior leaders having been drawn from the assurance business. She succeeds Deanna Byrne, who has led the office since 2017 and is moving on to serve as US assurance leader.

IOC and Deloitte announce expansion of Worldwide Olympic Partnership [International Olympic Committee]
The International Olympic Committee (IOC) and Deloitte today announced an expansion of their Worldwide Olympic Partnership. For the Olympic Winter Games Milano-Cortina 2026 through to the Olympic Games Brisbane 2032, Deloitte will take on the role of Games Technology Integration Partner for the Olympic Games, the Paralympic Games and the Youth Olympic Games.

The post Friday Footnotes: The Bravest of Accounting Firms; Oh STFU, CFOs; How Much Ya Making? | 8.09.24 appeared first on Going Concern.

The FRC explains the rule EY broke:

The Revised Ethical Standard 2019, which reflects the requirements of UK law, imposes restrictions on the amount of non-audit services that an audit firm may provide to a Public Interest Entity. The cap on non-audit work is 70% of the average of the fees paid to the audit firm over the previous three consecutive years. The cap applies at both Network level (i.e. members of the global EY network) and at Firm level (EY UK). EY UK tested the fee ratio at Network level but not at Firm level, and so accepted and carried out non-audit work in breach of the 70% fee cap. This breach was not intentional or dishonest.

EY was the auditor of record for Evraz from the time it was listed on the UK stock exchange in 2011 until late 2022 when the UK government imposed sanctions on Russia due to their invasion of Ukraine.

As for what exactly happened:

In early 2021 EY accepted an engagement by Evraz to carry out non-audit work in connection with a proposed disposal of the Evraz Group’s coal-related interests. These were principally held through a Russian company, PJSC Raspadskaya. It was proposed that this company would demerge from the Evraz Group and that a dividend in kind would be paid as part of the demerger. The proposed disposal was known as Project Gemini.

EY’s non-audit work in connection with Project Gemini related to the provision of working capital reporting, assistance with correspondence with the Financial Conduct Authority (“FCA”), and a comfort letter in connection with the information in the circular that was prepared to support the demerger.

The average of the fees paid to EY UK for its audits of Evraz in the three consecutive financial years prior to it carrying out work on Project Gemini was $400,462. 70% of this figure is $280,323. The total fees for EY UK’s non-audit services on Project Gemini that were subject to the 70% cap amounted to $535,000 and therefore exceeded $280,000 by a significant margin.

For their sins, EY received the following financial and non-financial wrist slaps:

• A financial sanction comprising: i) £121,305 in respect of disgorgement* of profits earned on fees in excess of the fee-cap; and ii) an additional £200,000 component. The additional component has been discounted for admissions and early settlement to £130,000, such that the total financial sanction is £251,305.

*The disgorged sum represents the profits on non-audit work that EY earned from Evraz plc, over and above the fee cap, which it would not have earned had it complied with the Ethical Standard, and which the FRC has now required EY to give up as part of the financial sanction imposed.

Non-financial sanctions as follows:

• A published statement in the form of a reprimand.
• A root-cause analysis report to be prepared and presented to the FRC identifying the reasons for the breach and actions taken since, including in response to the wider issue around EY’s handling of the approval and assessment of non-audit services, identified in the FRC’s 2023 Audit Quality Inspection and Supervision Report.
• Any further remedial action proposed by the FRC to be implemented as necessary.

“The Ethical Standard sets clear limits on the value of non-audit services an auditor can provide. Its aim is to uphold high standards of auditor independence and ensure public confidence in audit,” said Claudia Mortimore, Deputy Executive Counsel at the FRC. “In this instance, EY’s systems and controls failed to ensure compliance with the Ethical Standard which led to the fee-cap being breached. In addition to the financial sanctions announced, EY is required to report to the FRC on the reasons for the breach and to provide assurance that appropriate measures are in place to avoid any future recurrence.”

We’re sure they’re very, very sorry and won’t ever get caught doing do this again.

The post EY UK Gets Hit With a Weakass Fine for an Ethics Conflict appeared first on Going Concern.

Amid GCC boom, Big Four in India are boosting hiring of ‘tech architects’

This should be good.

If you don’t know the GCC acronym, you certainly know the concept. GCCs, or Global Capability Centers, are the offshore warehouses where they stuff all the people who work cheaper than you (the average cost of a full-time equivalent at a GCC was $22,939 including salary and other overhead, we’ll cover that in a moment below). Except GCCs aren’t like the cramped back alley cube farms where scammers named “Patrick” attempt to rip off your grandma, many of the offices look a lot like yours. GCCs could be worth more than $110 billion by 2030.

Last year, Reuters reported that Big 4 accounting firms were going to spread their tentacles out from big cities in India — Mumbai, Delhi and Bengaluru, for example — to so-called “tier-two” cities because the big city operations are starting to cost too much:

The world’s major accounting firms are stepping up investments in new Indian facilities away from bigger cities as global demand for cheaper back office operations grows and smaller towns move up the economic value chain.

…

Business service exports have become a critical part of India’s economy but the sector has been hit by a slowdown in global demand for software and challenges in big urban centres such as rising costs, high attrition and slow progress in getting workers to return to the office after the pandemic.

Said EY in its Future of GCCs in India – a vision 2030 report published June 2023 [PDF]:

In India, the focus cities for GCC set-ups continue to remain Bengaluru, Hyderabad, Chennai, Mumbai, Pune and Delhi NCR. However, tier-II cities such as , Jaipur, Vadodara, Kochi, Chandigarh are becoming popular for new set-ups owing to its improving infrastructure, favorable state policies, and lower real estate and talent costs. The total number of new GCC set-ups every year can jump up to 115 by the year 2030.

In that report, EY said the cost per full-time equivalent at the approximately 1,600 GCCs currently in operation in India has increased by 27% from 2019 to 2023. That figure is expected to increase by 30% from 2023 to 2030. 85% of that is salary, the rest is travel and other overhead. EY estimates the current headcount of 1.9 million at Indian GCCs will surge to 4.5 million by 2030. For the moment, GCCs account for only about one percent of India’s GDP.

But let’s discuss the matter at hand: the latest on Big 4 firms hungry for tech architects in India:

Deloitte India has over 500 such architects and the company says there is a growing demand for them across the consultancy’s clients.

“With the overall demand for architects across our clients growing at 20-25 per cent, Deloitte India has robust hiring plans in place to meet these growing demands,” said Deepti Sagar, chief people and experience officer at Deloitte India.

Purushothaman KG, partner and head – Technology Transformation & Telecom, KPMG in India said that they have also increased the hiring of these architects. “Our hiring strategy has been domain specific and platform specific,” he said.

Ranjan Biswas, EY India leader for Technology, Media and Entertainment, Telecom (TMT) and South region, said, “Our proposition for GCCs is a strong combination of business consultants and technology architects who work together to solve their business problems and, in many cases, lead their end-to-end transformation needs.”

EY India’s team servicing GCCs, including tech architects, has grown almost three times to about 11,000 people in 2023-24 from 4,200 in 2020-21.

The EY report mentioned in this article is embedded below for anyone who would like to read it.

Amid GCC boom, Big Four in India are boosting hiring of ‘tech architects’ [Business Standard (India)]

The post Big 4 Firms Have Specific Hiring Plans in India appeared first on Going Concern.

The article tells the story of Kaylee Buckley, 2024 graduate of Marquette’s Master of Science in Accounting program, formerly confused freshman, and current RSMer:

Shortly after her first week of accounting classes, Kaylee Buckley called her father, sobbing. She understood nothing.

“I was in the same boat as a lot of the freshmen when I started; I felt like everyone was talking in a foreign language,” Buckley recalls.

Years later, she would find herself student ambassador to confused and overwhelmed students sitting in the position she once did.

She found that most students were confused about the same thing that puzzled her at first: industry lingo. The solution: make the terminology relatable. Instead of saying “accounts payable,” Buckley would use the analogy of a credit card bill: something that needs to be paid even if the bill isn’t due right away.

Something as simple as reviewing the vocabulary can make a world of difference to struggling students.

“A lot of students will preface their question with, ‘I know this is a stupid question,’ and I promise them it’s not,” Buckley says. “A lot of people are feeling this way, and you’re courageous for asking for that help.”

“That moment where students start to get the concept and they don’t even realize it, the times when students who got a D on a test email me to say they earned a 90 on the next one; if I could bottle that feeling up, I would,” she said.

Dr. Rich is looking to make the program more proactive going forward. Rather than waiting for students to get a D, he wants to “create a student support ecosystem that empowers everyone to seek the help they need no matter what grades they’re receiving or what issues they’re having.”

Accounting for student success [Marquette University]

*US News & World Report 2023 ranking

The post Marquette University Launches a ‘No Stupid Questions’ Program For Early Accounting Students appeared first on Going Concern.

Immediately following this chart the report says:

If 2022 starting salaries were the primary determinant for business students choosing a major, accounting would be their last choice among this slate of options.

With the proliferation of salary information and ChatGPT at their fingertips, students and parents are savvy enough to understand and consider this as a factor. In a recent Journal of Accountancy interview with academic leaders, Professor Nancy Bagranoff of the University of Richmond said, “One change we have noticed is increased salary transparency. Students make use of online tools to compare salaries and are more aggressive in negotiating terms.” As these tools and pay transparency become more common, new recruits and experienced accountants are expecting higher salaries, and employers must respond.

Quote from National Pipeline Advisory Group’s Accounting Talent Strategy Report, page 59

The post Chart of the Day: Accounting Salaries Just Don’t Add Up appeared first on Going Concern.

Can we talk about how Construction Executive trademarked the phrase “Top Construction Accounting Firms”? No? OK.

To determine which firm is the most constructioniest, CE surveyed more than 700 firms in the US that have a dedicated construction practice. The data collected in their survey include how much revenue the construction practice brought in for 2023, how many CPAs are in this practice, the percentage of total revenue the practice accounts for, the number of states in which the firm is licensed to practice, the year in which the construction practice was established, and the number of Architecture, Engineering, and Construction Services (AEC) clients served during fiscal 2023.

CLA tops the list with 12,656 construction clients, 265 construction CPAs (of 3,049 total CPAs at the firm), 56 states, and 7.86% of its revenue coming from construction work. CLA hit the $2 billion in revenue mark in 2023, you can do the math. Areas of practice include a bunch of acronyms we’re not going to bother looking up.

The #2 firm, Forvis, comes in at just 2,624 construction clients. CLA is the only firm on the list with five digits in the number of clients category, making it clear they really do dominate this sector.

Without further ado, the top 20 constructioniest accounting firms in order:

1. CLA
2. Forvis
3. Baker Tilly
4. Crowe
5. Marcum
6. Wipfli
7. Plante Moran
8. CBIZ/MHM
9. Moss Adams
10. CohnReznick
11. Eide Bailly
12. Grassi
13. Citrin Cooperman
14. RubinBrown
15. Doeren Mayhew
16. Aldrich CPAs + Advisors
17. WithumSmith+Brown
18. UHY Advisors
19. Anchin
20. Carr, Riggs & Ingram

“CLA has worked hard to know and help our clients in the construction industry. It’s such an honor to be recognized again,” said Tom Dearnley, managing principal of construction industry, CLA. “We are so grateful for our clients’ confidence in us and appreciate the opportunity to hone our industry specialization.”

Let’s give them a clap for this sweet win. Make sure to clap loudly so the sound isn’t drowned out by jackhammers and banging.

CLA Named 2024 Top US Construction Accounting Firm for the Fifth Time [CLA]

The post CliftonLarsonAllen Gets to Brag About Coming in First in Something Again appeared first on Going Concern.

Because it’s 2024 and the profession is currently being disrupted by private equity and spaghetti throwing, some of this data was in desperate need of an update before the virtual ink dried on insidepublicaccounting.com’s CMS (for example, last week’s news about CBIZ acquiring Marcum). But let’s review the first twenty anyway.

The order in which the ten biggest firms appear on this list is unchanged from the 2023 IPA Top 100. Combined, the 20 firms above reported revenue of $117,736,275,471. So nearly $118 billion.

The smallest firm in the top 100 is Atlanta’s Smith + Howard with revenue of $53,193,000. The absolute last firm on the list of 500 is Shannon & Associates of Kent, Washington with a respectable $6,063,000 in revenue.

IPA trickles out a bunch more data it’s gathered on participating firms so keep an eye out for that in coming weeks.

The post The Biggest Accounting Firms in the US Whip It Out and Compare Size in This Much Anticipated List appeared first on Going Concern.

While we have you, if you’re in the market for accounting talent you should sign up for Always-On Recruiting from Accountingfly. It’s free! Get great candidates in tax, audit, and accounting in your inbox every week with no obligation to hire. Feel free to browse this week’s top candidates at your leisure:

ICYMI

The top stories on Going Concern this week:

Turns Out The Tipster Who Said Marcum and CBIZ Are Merging Wasn’t a Troll After All
Maybe AI Will Help KPMG Finally Get Gud at Auditing
Asian-American Ex-PwC Principal Alleges White Guys at the Firm Are Hatin’ Ass Haters
BREAKING NEWS: CPA Exam Candidates Broke NASBA’s Shit Again.
PwC Associate Becomes an Olympian to Avoid Working 60-Hour Weeks

Technology

AI Use and Technology Investment Are Top Private Company Leadership Priorities: Deloitte Private Survey [PR Newswire]
A Deloitte Private survey of C-suite executives found that increasing AI use across the organization (43%) and investments in technology (37%) are the top two private company business priorities over the next 12 months. In the report, “Private Company Outlook: Governance,” survey respondents also indicate that that emerging technology/AI is the most important competency (43%) to strengthen the organization’s board.

How a cheap barcode scanner helped fix CrowdStrike’d Windows PCs in a flash [The Register]
No one is missing work due to the CrowdStrike outage at Grant Thornton Australia on Rob Woltz’s watch!
Not long after Windows PCs and servers at the Australian limb of audit and tax advisory Grant Thornton started BSODing last Friday, senior systems engineer Rob Woltz remembered a small but important fact: When PCs boot, they consider barcode scanners no differently to keyboards. That knowledge nugget became important as the firm tried to figure out how to respond to the mess CrowdStrike created, which at Grant Thornton Australia threw hundreds of PCs and no fewer than 100 servers into the doomloop that CrowdStrike’s shoddy testing software made possible. All of Grant Thornton’s machines were encrypted with Microsoft’s BitLocker tool, which meant that recovery upon restart required CrowdStrike’s multi-step fix and entry of a 48-character BitLocker key.

GenAI boom hits M&A market [CFO Dive] The generative artificial intelligence boom is already having a major impact on companies’ merger-and-acquisition dealmaking strategies, according to a recent survey by KPMG. About eight in 10 dealmakers responding to the poll said that GenAI has had some effect on their M&A activity, with nearly half saying their strategy involves buying GenAI technology or products, according to a report on the findings. Forty-two percent of respondents said their organization is focused on using GenAI to support the M&A deal process. A smaller number (21%) said they are interested in striking deals to acquire GenAI talent.

Big 4

PCAOB Inspection Reports Show Increase in Audit Deficiencies by Big Four Firms [NYSSCPA’s The Trusted Professional]
The PCAOB inspected 215 audits conducted by all Big Four accounting firms in the United States, down from 220 a year earlier. Ernst & Young, Deloitte and PwC had an average 24 percent deficiency rate in their 2021 audits of public-company financials, up from 13 percent, according to the PCAOB’s most recent data, the Journal reported. KPMG’s audit-deficiency rate was redacted from the PCAOB’s inspection report on the firm—the Journal couldn’t determine by press time why this information was redacted.

UK regulator calls out BDO and Forvis Mazars over audit quality [Financial Times]
The UK’s accounting regulator has criticised BDO and Forvis Mazars for shortcomings in their audits for the fourth straight year, and threatened to take “stronger action” against them if there was no improvement. In its annual review of audit quality published on Tuesday, the Financial Reporting Council said the gap between the Big Four — Deloitte, EY, KPMG and PwC — and the mid-tier firms had widened. “Disappointingly, BDO and Forvis Mazars’ performance has fallen significantly below our expectations,” said Sarah Rapson, executive director of supervision at the FRC. “Both firms are strategically important to the UK audit market and the wider UK economy, so it is vital that they deliver on their agreed improvement plans.”

Thai court orders class action against Deloitte over Stark fraud case [Reuters]
A Thai court will allow a class action suit against the local arm of accounting firm Deloitte over its audit of scandal-hit Stark Corporation, it said in a document on Wednesday. The case was brought by Stark’s retail bondholders, who accuse Deloitte Touche Tohmatsu Jaiyos and another individual of “acting intentionally, negligently, or in gross negligence resulting in damages”, according to a complaint seen by Reuters. The court document said class action, a rare legal procedure in the country, would be allowed and Deloitte has a week to appeal the decision. The class action alleges that Deloitte, as auditors, certified a clean financial statement without auditors’ notes or remarks to caution that it may not be up to accounting standards, according to the complaint.

PwC chief’s $1.2m bonus kept ‘secret for more than a year’, inquiry told [The Guardian]
The chief executive of PwC Australia, Kevin Burrowes, received a $1.2m payment from the consulting company’s international arm which he did not initially reveal to the parliamentary inquiry into the 2015 leaking of confidential government tax reform information. A parliamentary inquiry was told on Friday that Burrowes first told the corporations and financial services committee that he was paid an annual salary of $2.4m. That was later corrected to $2.8m. However, he did not disclose the additional $1.2m income from PwC international until a June meeting of partners this year, about 12 months after he took up the Australian role, as reported by the Australian Financial Review. Burrowes said his current annual salary was $3.2m. During a grilling of PwC on Friday, the committee chair, Senator Deborah O’Neill, told Burrowes that he had kept the extra payment “secret for more than a year … [It] looks very deceptive to me”.

PwC under pressure to name global partners linked to Australian tax leaks scandal [Financial Times]
The former chief executive of PwC Australia has said it is “difficult to accept” that international partners have not been named in the wake of the tax leaks scandal that has plagued the firm. PwC became embroiled after revelations that the consultancy’s Australian arm used confidential information about planned tax avoidance legislation to win new business. Uber and Google were among the companies to have engaged with the firm. PwC Australia named a number of partners who left the firm as a result of the scandal, but PwC International has refused to publish a report from law firm Linklaters about how the information was used by unidentified overseas partners, much to the frustration of Australian politicians and regulators who have called for full transparency.

Deloitte’s Suzanne Kounkel on Why Every Employee Is a Marketer [Adweek]
Kounkel shares how Deloitte has been bringing its brand personality to life over the past couple of years. She spotlights their inspiring WNBA finals campaign with the theme “girls who play become women who lead.” This powerful campaign not only highlighted Deloitte’s support for professional women on and off the court but also resonated deeply with their brand purpose. Through intertwining their core values with compelling storytelling, Deloitte showcases its unique identity in a vibrant and relatable way. The overall humanization of the brand through meaningful and impactful campaigns creates a lasting connection with the audience.

Inclusiveness across socio-economic backgrounds and social mobility [EY]
We all have different starting points based on our backgrounds and identities, which shape the experiences, and sometimes the barriers we face. One aspect of our identity which is often overlooked at work is our socio-economic background. Factors like our upbringing and the education and income of prior generations of our family impact the extent to which we can access resources, networks and opportunities. It can also come with social stigma, and a pressure to hide our backgrounds for fear of judgment, negative perception of capability or pressure to “fit in”. This can significantly impact career experiences and progression. Social mobility is how a person’s socio-economic situation changes over time. It plays an important role in social cohesion and economic growth. Given that it is inconsistently enabled across the globe, we’re surfacing this important topic globally as part of our broader DE&I and social equity efforts, to spark new conversations and promote action.

New Deloitte, NongHyup campaign promotes rice for breakfast [Korea JoongAng Daily]
Deloitte Korea employees pass out leaflets and cooked rice produced by the National Agricultural Cooperative Federation, better known as NongHyup, to pedestrians as part of the two firms’ collaborative campaign encouraging the consumption of rice for breakfast in Yeongdeungpo District, western Seoul, on Wednesday.

Mergers & Acquisitions

Advisor to CPA Firms Wowed by CBIZ/Marcum [INSIDE Public Accounting]
Allan D. Koltin, CEO of Koltin Consulting Group, a well-known advisor on M&A within the profession, said that if anyone had asked him a year ago whether CBIZ and Marcum would combine, he would have said, ‘Not in my lifetime.’

Axiom CPAs to join CLA on August 1 [CLA]
Axiom provides services for its clients related to tax, assurance, and general accounting, as well as specialty tax credit and incentive services, and state and local tax consulting. Located in Albuquerque, New Mexico, Axiom has four partners and 16 team members that will become part of CLA. Axiom provides services in numerous industries that align well with CLA’s focus, including construction, real-estate, manufacturing, technology, government and many more. Axiom is a natural fit within the CLA family.

Accounting firm grows Southeast Michigan presence with Bloomfield Hills acquisition [Crain’s Detroit Business]
Saginaw-headquartered accounting and advisory firm Yeo & Yeo CPAs and Advisors has acquired Bloomfield Hills-based Berger, Ghersi and LaDuke PLC.

The State of the Profession

US accounting firms rethink global networks [Financial Times]
The tier of firms beneath KPMG, Deloitte, PwC and EY are racing to meet the needs of increasingly multinational clients while at the same time seeking to make better use of their global networks to spread the cost of technology and staff. “We are no longer a capital-light profession, we’re a cap-heavy profession,” said Francesca Lagerberg, chief executive of Baker Tilly International, whose 110 member firms had $5.2bn in annual revenue. “There’s an amount of spaghetti against the wall as everybody is trying different things, but no one wants to be the network that didn’t make the moves and wasn’t able to take advantage of the opportunities.”

PE Infusions Have Accelerated Mergers, Reshuffling Fastest-Growing Firms [INSIDE Public Accounting]
Last year, the No. 1 fastest-growing IPA 100 firm, counting mergers as well as organic growth, was Atlanta-based Aprio at an eye-popping 85.7%. In 2019, it was Tulsa, Okla.-based HoganTaylor at 31.0%. The pace of mergers and acquisitions has quickened since then, driven in part by the entry of private equity into the profession. Will a PE-funded firm be named the fastest-growing for 2024?

When your firm sells out to private equity but you're in audit pic.twitter.com/fkOy9MuwHT

— Going Concern (@going_concern) July 31, 2024

Small Firms

Single-owner firms: The thrill of flying solo [Journal of Accountancy]
The JofA talked to 10 sole proprietors, most of whom are also sole practitioners. Some have been on their own for years; others got started just before the pandemic hit. One has retired after 30 years as a solo, while another is working on earning her CPA. As a group, they shared their experiences and offered their perspectives on the ups and downs of flying solo (see the sidebar, “Pros and Cons of a Solo Practice”). Their stories showcase the diversity of purpose, services, and experiences of those who have dared to go it on their own.

Small firms find success with advisory services [Journal of Accountancy]
Five years ago, T. Jayden Doyé, CPA, prepared clients’ tax returns in his employer’s Atlanta office and dreamed of doing work on a beach. Today, he runs a small accounting firm and does the work he wants anywhere he wants. “Now I live that life,” Doyé said.

The post Friday Footnotes: It’s BDO and Forvis Mazars’ Turn to Get Yelled at About Audit Quality; Eat Rice Because Deloitte Asked; PwC CEO’s Secret Bonus | 8.2.24 appeared first on Going Concern.

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A post shared by Frank Rijken (@frank.rijken)

According to Insta, LinkedIn, etc. 27-year-old Rijken is an M&A advisor. And he’s still working, just a normal amount like 40 hours a week.

Underrated MAG thing is Frank Rijken from NED who was at AA finals today also has a full time finance? job at PwC in the Netherlands. That’s crazy.

— con (@conmccool) July 31, 2024

Supposedly there’s video of him talking about working full-time while training but we couldn’t find it. If anyone has it, let us know.

When big 4 M&A just isnt enough.
byu/OrdinaryPhilosophy32 inBig4

How do you say “Good luck, Frank!” in Dutch?

The post PwC Associate Becomes an Olympian to Avoid Working 60-Hour Weeks appeared first on Going Concern.

After an explosive report showed thousands of Internal Revenue Service (IRS) employees owe nearly $50 million in overdue taxes, U.S. Senator Joni Ernst (R-Iowa) blasted IRS Commissioner Daniel Werfel for a complete lack of accountability and introduced the Audit the IRS Act, requiring annual audits of agency employees and the termination of every IRS agent who isn’t paying their taxes.

Beyond the widespread tax evasion, the Department of Treasury Inspector General for Tax Administration (TIGTA)’s audit, conducted at the request of Senator Joni Ernst, is full of jaw-dropping pieces of information about the agency, including that it knowingly rehired individuals who committed criminal and sexual misconduct.

“The spirit of 1776 is still alive and well with a tax revolt happening right now at the most unlikely of places in Washington, the IRS,” said Ernst. “While the IRS warns, ‘tax evasion is a serious crime punishable by imprisonment, fines, and the imposition of civil penalties,’ the agency is rewarding its own tax dodgers with paychecks and lavish benefits made possible, ironically, with the taxes paid by law-abiding citizens. My legislation will create a zero-tolerance policy for tax evasion and misconduct while ensuring these IRS bureaucrats are no longer allowed to live by one set of rules and enforce another on honest, hardworking Americans.”

Hold up, lavish benefits? At the Internal Revenue Service? Citation needed.

Her strongly worded letter to IRS Commissioner Danny Werfel is below and the text of her bill here.

Ernst Exposes Massive Tax Evasion at IRS, Demands an Audit of the Auditors [Senator Joni Ernst, R-IA]

The post Apparently IRS Employees Owe $50 Million in Back Taxes and Senator Ernst is Outraged appeared first on Going Concern.

“These artificial intelligence capabilities enhance our overall transformation to deliver a better audit experience for our people and the companies we audit,” he added. “Our AI capabilities will further strengthen our engagement teams to more effectively engage Audit committees and management committees.”

And now, the press release talking points:

KPMG Clara with AI is connected to our broader transformation efforts to enhance audit quality through our Trusted AI framework. For example, new generative AI capabilities will help teams:

• Refine risk assessments: AI assistants can review documents to help engagement teams identify risk factors. For instance, within KPMG Clara, engagement teams can leverage AI to help review meeting minutes and flag possible accounting and fraud risks.
• Develop substantive testing procedures: Our AI assistant has direct access to our audit methodology, enabling auditors to design appropriate substantive testing procedures to respond to risks quicker.
• Enhance audit documentation: By working with our AI assistant, team members can quickly summarize, question and consider improvements to engagement-specific audit documentation within KPMG Clara.

And:

KPMG today also unveiled AI and generative AI capabilities that will be deployed in the workflow in the coming months. These include:

• A growing prompt library that will, over time, include AI-powered agents to assist Audit teams in driving audit quality;
• Automated quality scoring to generate AI assessments and deliver feedback to Audit teams on actions for quality improvement;
• Use of AI and machine-learning to automate the review of financial statements, augmenting engagement teams’ assessment that all required disclosures have been made to the capital markets; and
• Assurance capabilities integrated into the workflow for teams delivering assurance over disclosures, such as emissions disclosures. 

“All of our auditors are trained on how to effectively use AI with a human-in-the-loop mindset to maintain quality, accuracy and professional skepticism,” said Thomas Mackenzie, KPMG U.S. and Global Audit Chief Technology Officer.

We trust this development will help KPMG push its deficiency rate below 25% for the first time since 2011.

KPMG Announces AI Integration into Global Smart Audit Platform, KPMG Clara [KPMG

The post Maybe AI Will Help KPMG Finally Get Gud at Auditing appeared first on Going Concern.

Grant Thornton and Grant Thornton Lite today announced a partner, principal, and managing director class of 56 people. They’re going to make us do math here to figure out how many partners and principals they have this year so we can compare it to prior years. Sorry, MDs, you’re left out.

Historical number of partners and principals promoted each year at Grant Thornton:

• 2024: 22
• 2023: 43
• 2022: 38
• 2021: 46
• 2020: 30
• 2019: 42
• 2018: 32
• 2017: 39
• 2016: 47
• 2015: 50
• 2014: 32
• 2013: 30
• 2012: 27
• 2011: 26
• 2010: 22

Because this is the first PPMD announcement since Grant Thornton’s huge private equity deal and mixing attest services in with PE-backed entities is a no-no, they made sure to separate the audit and non-audit peeps. Everyone get used to these convoluted announcements, it’s only going to get worse from here.

In total, Grant Thornton Advisors LLC, which provides non-attest services, admitted nine new principals and promoted 22 professionals to managing directors. At the same time, Grant Thornton LLP, which provides attest services, admitted 13 new partners and promoted 12 professionals to managing directors. These appointments and promotions are effective August 1, 2024.

Seth Siegel, CEO of Grant Thornton Advisors LLC, emphasizes that the newly named leaders will serve clients with excellence and propel Grant Thornton forward at a poignant moment for the firm.

Poignant, that’s a new word for them. At least we got one familiar DYNAMIC among all this word salad.

Thanks for internalizing last year’s criticism and giving the people what they want, Seth.

Audit wins the PPMD race by a long shot with 44% of the newly promoted peeps coming from there and the only service line to have any new partners. Coming in second — and reminder, this is a separate entity — is tax with 27% followed by advisory at 20% and internal services at 9%.

New PPMDs at Grant Thornton LLP (the audit business):

New PPMDs at Grant Thornton Advisors (the PE side of the business that they will remind you multiple times is a totally different business from the attest side):

New this year thanks to private equity is the following disclaimer at the bottom of the promotions press release:

“Grant Thornton” is the brand for two professional-services entities: Grant Thornton LLP, a licensed, certified public accounting (CPA) firm that provides audit and assurance services ― and Grant Thornton Advisors LLC (not a licensed CPA firm), which exclusively provides non-attest offerings, including tax and advisory services. With revenues of $2.4 billion for the fiscal year that ended July 31, 2023, and dozens of offices nationwide, Grant Thornton represents a community of almost 10,000 problem solvers, relationship builders, and industry specialists who know that how we serve matters as much as what we do.

Grant Thornton LLP, Grant Thornton Advisors LLC and their respective subsidiaries operate as an alternative practice structure (APS). The APS conforms with applicable laws, regulations and professional standards, including those from the American Institute of Certified Public Accountants.

Grant Thornton LLP and Grant Thornton Advisors LLC serve as the U.S. member firms of the Grant Thornton International Ltd (GTIL) network. GTIL and its member firms are not a worldwide partnership and all member firms are separate legal entities. Member firms deliver all services; GTIL does not provide services to clients.

Congrats to all.

Grant Thornton names 56 new partners, principals and managing directors [Business Wire]

The post Promotion Watch ’24: 56 People Rise to the Top of the Heap at Grant Thornton* appeared first on Going Concern.

ICYMI

These are the top stories on Going Concern this week

• You Can Sit for the CPA Exam in the Philippines Now
• Golf Fans Everywhere Now Think BDO Sells Dildos and Lube
• Just How Much Have Accounting Salaries Increased in the Last Five Years?
• Who Wants to See How Much Big 4 Revenue by Service Line Has Changed Since SOX?
• RSM US Had a Good Year

Tax

Super-rich being advised how to avoid Labour tax clampdown, undercover investigation suggests [Isle of Man Today]
Didn’t KPMG get in trouble for this years ago? Yes, yes they did.
The super-rich are being advised how to use a loophole in pensions investments to shelter their wealth from Labour’s clampdown on large-scale tax dodging, the Guardian can reveal. Undercover filming by the Guardian suggests multimillionaire UK residents are being pitched offshore products said to legally protect their fortunes from inheritance tax (IHT) and capital gains tax (CGT). At a private event held a week before the general election, the international accounting brand Baker Tilly told advisers to the ultra-wealthy how they could use offshore pension schemes to shield their clients’ fortunes from tens of millions of pounds of inheritance taxes. One promoter told how his client had placed £30m into a pension scheme to protect it from inheritance taxes. He told an undercover reporter at the exclusive event in the City of London that the government would not legislate to close the schemes down as ministers have “bigger fish to fry”.

IRS shares more warning signs of incorrect claims for the Employee Retention Credit; urges businesses to proactively resolve erroneous claims to avoid penalties, interest, audit [IRS]
The IRS issued today’s five new warning signs to give businesses and tax professionals additional time to prepare for an upcoming announcement involving new steps being taken to counter improper ERC claims. In coming days, the IRS plans to issue more information on new compliance work involving high-risk ERC claims as well as details about an anticipated short-term reopening of the Voluntary Disclosure Program and an important update about impending processing of low-risk payments to help small business with legitimate claims. This follows up on last month’s announcement that the IRS was denying more of the highest-risk ERC claims. “The IRS continues working aggressively to pursue improper claims as well as increase payments going out to businesses with legitimate claims on these complex credits,” said IRS Commissioner Danny Werfel. “As we prepare for the next major announcement, we want businesses to be aware of common errors our compliance teams are seeing, many of which reflect bad advice coming from promoters. The IRS continues to urge people with pending claims or previously approved payments to talk to a trusted tax professional rather than a promoter and see if any of these red flags apply to them.”

In the Workplace

Meet your Gen Z mentor: Why EY is tapping younger workers to bridge the generational skills divide [Fortune]
Professional services firm EY has an informal program called “reverse mentoring,” when two employees of different generations are paired together to share wisdom—with millennials and Gen Z at the helm. The company already has a global mentorship program that has been around since 2020, but EY decided to pilot the smaller concept earlier this year with five pairs of staffers. Dan Black, global leader of talent strategy for EY, tells Fortune the firm unofficially launched the initiative to better connect its dispersed and diverse group of employees. “We have this huge multi-generational workforce, almost 400,000 people, and helping to facilitate how those various generations work together is a really big thing that we continue to work on. That’s where reverse mentoring comes in,” he says.

Are the Olympics Going On?

Why EY, Visa are offering programs to attract athletes, ex-Olympians [WorkLife]
Athletes are disciplined, collaborative and deadline-driven. They usually have excellent time management, public speaking and interpersonal skills that lend themselves to a successful career. WorkLife previously reported on whether athletes perform as well in the workplace as they do in the field. The answer: yes, they usually do. In fact, student-athletes typically see a 60% increase in salary growth, while non-athletes only saw a 45.3% increase, according to data from workforce intelligence platform Revelio Labs. Here’s a deeper look at EY and Visa’s athlete charm offensives.

EY: How is the Olympics Advocating Sustainability in Events? [Sustainability Magazine]
Matthew Bell, Global Climate Change & Sustainability Services Leader at EY, explores sustainability in large sporting events ahead of Paris 2024 Olympics. Compared to other industries, such as fashion, the impact of supply chain and sustainability issues in sports is not as widely known and is complex and difficult to measure. However, it is recognised that unsustainable activities in sports have been contributing to climate change.

News

Four distinguished leaders to be inducted into Spears Business Hall of Fame [Oklahoma State University]
Raised in Oklahoma City, Vickie Carr held various leadership positions throughout her career of nearly 40 years with Deloitte. The multinational accounting firm promoted Carr to partner in 1999. She also founded Deloitte’s National Tax Accounting Group and helped create its Global Tax Accounting Group, which she is leading until her September retirement. Eddy Ditzler is retired from public accounting and lives in Edmond, Oklahoma, with his wife of 39 years, Deniece. He remains active in business as a member of the Board of Directors and the Audit Committee Chair for The Reserve Petroleum Company. Ditzler is also a member of the audit committee of the Oklahoma City Community Foundation. He was honored in 2004 as a School of Accounting Distinguished Alumnus and in 2014 in the “Spears School Tributes: 100 for 100.”

Accounting for the Future: Empowering Tomorrow’s CPAs Today [Seton Hall University]
Seton Hall University recently hosted the “Accounting for the Future” Pre-College program, an inspiring two-day workshop designed to introduce high school students to the dynamic world of accounting. The program, held on Seton Hall’s picturesque campus, brought together students from ten different high schools, including participants who traveled from as far away as Miami, Florida. The workshop was uniquely crafted and led by six talented students from Seton Hall’s CPA Pathway Apprenticeship Program, Phillip Bender, Diana Cavero, Amaury Flores Jr., Michael Lombardi, Daniel McBratney and Tyler Woods, who chose this impactful initiative as their capstone project.

SF accounting firm owes Mitchell accountant $107K in non-compete dispute, high court rules [Mitchell Republic]
The South Dakota Supreme Court has ruled that a now-defunct Sioux Falls accounting firm owes a Mitchell accountant $107,000 after violating the terms of a business purchase. In a 4-0 opinion released Wednesday, July 24, the state’s high court ruled that Sioux Falls-based accounting firm FDJ violated the terms of an agreement to purchase Ross Determan’s Mitchell accounting firm by failing to pay Determan a share of the company’s revenue.

AI

Accountants Need Training in How to Use AI Effectively: Podcaster Blake Oliver [Techopedia]
Technology – from AI to Blockchain – will have huge implications for how accountants work. According to research last year by Moore Global and the Centre for Economics and Business Research in the UK, accountancy firms have spent nearly four-times as much implementing Artificial Intelligence (AI) systems as law firms and other professional services organisations. However, argues influential podcaster and accountant, Blake Oliver, a wholesale change in how accountants are trained is needed so that employees get the most from new tools. And a total overhaul of how accountancy firms work, including attitudes to employee wellbeing, is also long overdue.

Tax & accounting firms optimistic about GenAI, planning and adoption come next [Thomson Reuters]
As the technology around generative artificial intelligence (GenAI) advances, tax & accounting firms are facing an inflection point. Many tax & accounting professionals believe that GenAI will be a part of their future, with more than half saying they believe that GenAI can and should be applied to their work. At the same time, however, many professionals and their firms have not yet explored fully using GenAI for either personal or firm-wide work, and many said that adoption is still years away. Indeed, many tax & accounting firms are still in the early stages of discerning the business implications of GenAI technology, as well as how it fits into their policies and training programs.

Attention CFOs – invest the ‘AI dividend’ and elevate the role of the accountant [Diginomica]
Today, every forward-thinking enterprise and financial organization is exploring how AI and large language models (LLMs) can be integrated into their operations. Sage’s annual CFO research report, The Secrets of Successful CFOs, found that eight in 10 CFOs are embracing AI and automation to save time and increase their own strategic value. But is the excitement warranted? Properly applied, AI can transform and accelerate everything from financial reporting and investor communication to fraud detection, investment analyses, asset allocation, and more.

Pandemic Aid That Isn’t ERC

Pop stars got millions in pandemic aid that raised red flags for their accountants — but they took the cash anyways [Business Insider]
A major Los Angeles accounting firm that caters to music stars was privately worried that its artists could be breaking the law by applying for millions of dollars in pandemic-era grants from the Small Business Administration, court records show. Congress created the Shuttered Venue Operators Grant in 2021 to help theaters and indie music venues stay in business during the pandemic lockdowns. As the name implies, the grants — which were not required to be paid back — were intended for theater owners, performing-arts companies, promoters, producers, and other behind-the-scenes businesses that had no money coming in.

Audit

B.C. accounting regulator criticized for anonymizing member misconduct [Business in Vancouver]
Since March 2021, the U.S. Public Company Accounting Oversight Board (PCAOB) has unleashed a wave of enforcement decisions against B.C. accountants, levying numerous practice restrictions and hundreds of thousands of dollars’ worth of fines against nine Vancouver firms that audit public companies. These penalties were issued under settlements in which the firms did not admit nor deny the serious violations alleged by board investigators. The Canadian Public Accountability Board (CPAB)—the regulator for public company auditors—has taken enforcement action against five of them. However, the Chartered Professional Accountants of British Columbia (CPABC), which is responsible for licensing and governing the 40,000 CPAs in this province, has not disclosed any of these enforcement cases on its website.

Stop undermining small audit firms, banks told [People Daily (Kenya)]
The Institute of Certified Public Accountants of Kenya (ICPAK) has raised an alarm over the prejudicial and partial profiling of some audit firms in the financial sector. “Institute has noted concerns from its members and various stakeholders that some of the Financial Institutions only recognise financial statements that are audited by one of the ‘big four’ audit firms which, they deem, to be the only valid and acceptable audit reports,” said Philip Kakai, Chairman at ICPAK. Kakai stressed that profiling audit firms or determining only financial statements by the “Big Four” as valid or acceptable is discriminatory, irregular, and does not foster competition in the market. “The terminology, ‘the big four audit firms’ is a terminology that does not exist in its regulatory framework as a regulator of all accounting/ audit firms in Kenya,” he added.

Talent

Attention accounting firms: This is your weekly reminder to sign up for Always-On Recruiting from Accountingfly if you’re in the market for talent. You’ll regularly receive a fresh batch of candidates in your inbox to browse at your leisure with no cost and no obligation to hire. Check out this week’s candidates below and find your next great hire today!

Sustainability and Those Other Two Letters

Sustainability reporting, ESG management roles on the rise: Deloitte [Supply Chain Dive]
The accounting firm, which conducted the survey in January, found 49% of respondents were conducting sustainability oversight by including ESG in the companies’ disclosure committee review while 48% were adjusting and accelerating reporting timelines. Respondents almost unanimously — 98% — said they had seen their company make progress toward sustainability goals set last year. Of these, 25% reported “significant progress,” 60% reported “moderate progress,” while 14% reported “minimal progress.” Nearly all respondents indicated they were preparing for increased disclosure requirements.

How CFOs Can Help Meet Corporate ESG Goals: SAP Concur and Deloitte’s Whitepaper [ESG News]
Investors and regulators demand better climate change disclosures, challenging companies to incorporate these into their financial judgments. Emerging regulations, like the EU’s Corporate Sustainability Reporting Directive (CSRD), require comprehensive reporting, including Scope 3 emissions, covering an entire value chain. CFOs are essential in ensuring the accuracy of non-financial information, connecting financial and sustainability data. They should lead ESG disclosures, influencing risk analysis, governance, and third-party assurance. Deloitte found only 37% of firms had CFOs leading sustainability efforts, highlighting the need for more active involvement.

The post Friday Footnotes: The IRS Has Another ERC Warning; Non-Big 4 Firms Get Dissed; Is AI Excitement Warranted? | 7.26.24 appeared first on Going Concern.

In a lawsuit filed on July 22, former PwC principal, FinTech magazine top woman in fintech, and 55-year-old Asian-American Nina Owens alleges that she was ousted from the firm one day before her five-year anniversary “that would have afforded her greater job protection and full vesting of her 401(k) account.” This despite exceeding revenue targets and high praise from clients, she claims.

Why is her Asian-ness relevant to the story? We’ll let the lawsuit tell it.

As a 55-year-old Asian-American woman, Owens did not get the support and recognition that PWC gave to partners and principals who were men, white, and/or younger. PWC’s age bias is so open, that it has mandatory retirement for partners and principals at age 60.

PWC has gotten away with this blatant age bias by taking the position that its thousands of partners and principals are not in fact employees entitled to the protections of the civil rights laws and (at least until some recent changes in federal law) by forcing them into secret arbitrations.

PwC is no stranger to age-based lawsuits. A recent class action settlement required PwC to pay $11,625,000 after an older CPA was denied employment at the firm.

Now let’s get to the (alleged) hater-ass white guys:

PWC brought Owens in as a principal in 2019 to build out a digital transformation focused on payments, a business area that had languished for the past several years. Owens was soon disappointed. Her first manager, a white man, did not provide her with any
support or integration into the firm, prohibited her from pursuing new business opportunities outside of consumer credit cards, and took away leads that Owens generated and provided them to male partners and directors. Another white, male partner stole credit for revenue from Owens, making her tracked revenue look less positive than it actually was, and blocked her promotion to a senior role leading an account. Another male partner engaged in gender-based abuse to Owens, tried to steal revenue credit from her, and tried to get her removed from her primary account. His conduct was so egregious that Owens filed two complaints and a female Latina Director filed an additional complaint against him with PWC’s internal Ethics & Compliance (“E&C”) department in August/September 2023. Owens repeatedly raised concerns about all this conduct to PWC, but PWC did not take any genuine remedial action. Instead, PWC punished Owens.

Things started looking up in early 2023 but not for long:

In January 2023, Owens got a new manager who removed prior obstacles and allowed her to pursue a new line of business she had been trying to develop for years. Almost immediately, Owens’s revenue began to increase, and after that grew exponentially. Rather than applaud Owens’s success, PWC notified Owens on March 25, 2024, that she was being forced to “withdraw” from the firm no later than June 26, 2024. As of December 31, 2023, six months into PWC’s fiscal year, Owens had already exceeded her annual revenue target. As of June 26, 2024, Owens’s revenues were approximately 122% of her target, even accounting for the fact that PWC pushed Owens to give up to other partners 60% of revenues she sold.

Mentioned in the suit is the partner to whom she reported Jim Russell, payments practice leader and white guy in his 40s. “Russell became increasingly negative in his interactions with Owens, despite her success in her first year,” says the suit. “He also began to make public comments about her age. For example, during a team meeting Owens said that Gerson Lehrman Group (“GLG”), a financial services company that provides experts, had asked to interview her. Russell said, in front of the entire team, that “GLG only asks people to serve as experts who are old.”

The alleged hater also limited her opportunities to generate revenue, she says:

Owens was not permitted to solicit clients with whom she had worked at Accenture due to restrictive covenants. Despite this, Russell provided Owens with fewer than five leads in three years. Russell provided leads to young, white, male Directors and to his fellow white, male principals in payments. Russell also did not offer Owens any thought leadership or speaking engagement opportunities, except for one opportunity in December 2021. Russell gave opportunities to participate in conferences to younger, white men.

And another male partner, presumably a non-white one but let’s not assume:

In July 2023, Owens sold three projects with combined revenue in the seven figures to Client A. She agreed to co-deliver with, and split the revenue with, Vishal Rawal, a male partner in the Strategy& group about 15 years younger than her. Although the COO of Client A had asked Owens to scope the work, Rawal changed the EP signature to his name in the final version of the contract in July 2023, which Owens did not know at the time.

In July and August 2023, Owens repeatedly complained to Hoover and Vennetti that Rawal was trying to push her off the account, was allocating more than 50% of the revenue to himself, and was engaging in gender-based harassment toward her. Rawal was abusive and disrespectful toward Owens. For example, he told Owens not to speak on conference calls and said he would do all the speaking; he pulled her into conference rooms to threaten and berate her; he told the male Directors to exclude Owens from meetings and not to follow her directions; he yelled at her in front of Directors; and he sent emails denigrating her, on which he copied junior employees. Owens never saw Rawal treat any men that way.

OH and she claims she was consistently underpaid by 15-40% compared to her male and white partner/principal peers from FY20 to FY22 and for FY24, was paid 30% less that the average PwC partner in the US at her level and 38% less than the average direct admit partner in the US.

Owens asserts the behavior described in the suit constitutes race discrimination and retaliation according to Section 1981 of the Civil Rights Act of 1866, Employee Retirement Income Security Act (ERISA) violations, and violations of New York city and state laws.

In a comment to HR Dive, a PwC spokeswoman said Owens’ claims are “baseless” and that PwC treated her fairly. “The decision to withdraw her from the partnership was based on legitimate business considerations and determined in accordance with PwC’s partnership agreement to which she agreed when she was admitted — which also requires she pursue her claims before a neutral arbitrator. PwC will have these meritless claims moved to arbitration, and then will defeat them,” she said.

Coincidentally, this month marks ten years since PwC introduced arbitration for employee beefs. It also marks ten years since a PwC spokesperson told us the move to arbitration was “a noncontroversial decision” despite us having heard and read quite a bit of griping about it in the time since. And a follow up to that first story we published in March 2014: PwC Issues New Offers to New Hires, Now With Bonus Mandatory Arbitration.

Full suit for your reading pleasure below.

The post Asian-American Ex-PwC Principal Alleges White Guys at the Firm Are Hatin’ Ass Haters appeared first on Going Concern.

CPA Journal has published an intriguing deep dive into Big 4 revenue, specifically how the firms started making more money in advisory than audit or tax in the last 10+ years. You should go read it if this is at all interesting to you but we’re just going to focus on two charts because the Going Concern audience, and its editorial team, have the attention span of squirrels that got into a case of Red Bull.

Covered in the article are several events over this 23-year period that put upward or downward pressure on Big 4 revenue, things like the collapse of Arthur Andersen dumping all those clients on other firms, Sarbanes Oxley, the 2008 financial crisis, and PCAOB paper-pushing.

Writes The CPJ:

Over this period, audit revenue declined while advisory service revenue increased. Overall, the revenues of the Big Four have increased from $28 billion (2000) to $79 billion (2022); this represents a 183% increase over 23 years. The increase in overall revenue was interrupted by a decrease in total revenues from 2004 to 2006, during which time the firms (except for Deloitte) sold off their advisory service practices. The 2008 financial crisis contributed to the leveling off of revenues from 2009 to 2010. Contributions to revenue from advisory services were the lowest (14%) in 2005, while assurance and tax services were 62% and 24%, respectively. This sharply contrasts with 2022, when advisory service revenues were 51%, and assurance and tax service revenues were 27% and 22%, respectively.

And now, Exhibit 2.

Exhibit 2 shows that Big Four advisory service revenues grew from $11 billion (2000) to $40 billion (2022); this represents a 274% increase over 23 years. Revenue from advisory services was temporarily constrained by the enactment of SOX, which prohibited auditors from providing advisory service to assurance clients. In response, the Big Four sold off their advisory service practices one by one, except for Deloitte, which did not do so due to market conditions. Deloitte’s failure to divest may have provided an example of how advisory services may be sold to non-audit clients without violating SOX. Therefore, as the non-compete agreements with their former advisory arms expired, the other three firms began to replicate the success of the Deloitte business model. Advisory service revenue doubled from 2010 to 2015 and has continued to increase rapidly since then, leading to a concern about the impact of advisory services on public accounting firms (Alyssa Schukar, “Big Four Accounting Firms Come Under Regulator’s Scrutiny,” Wall Street Journal, March 15, 2022). Since 2014, total advisory revenues have exceeded total assurance revenues for the Big Four by 50% or more and growing. Deloitte is the clear leader in advisory revenue, followed by PwC, EY, and KPMG.

Here’s a link to that WSJ article should you care to peruse it.

During the period analyzed, cumulative assurance revenues at Big 4 firms doubled — from $11 billion in 2000 to more than $21 billion in 2022 — and tax went from $7 billion in 2000 to $18 billion in 2022, an increase of 168%.

They go on to analyze the individual firms’ revenue by service line, go check it out if you want.

The post Who Wants to See How Much Big 4 Revenue by Service Line Has Changed Since SOX? appeared first on Going Concern.

Law.com has them at #5 in revenue after Kirkland & Ellis, Latham & Watkins, DLA Piper, and Baker McKenzie. A few sources, some of them at least a couple years old, say Dentons does lead the global law syndicate in size by headcount. Still others, many of which appear suspiciously aligned with ChatGPT’s dialect, contradict this claim. Our former sister site Above the Law has a story from 2023 detailing how Dentons became the world’s largest law firm in 2015 and it wasn’t from hiring 6,000 lawyers (Vault calls it “the Pac-Man of law firms“). Anyway, splitting hairs here.

How about that press release:

Dentons, the world’s largest global law firm, today announced that its Global Board of Directors and Global Advisory Committee have elected Kate Barton as the Firm’s next Global CEO. Barton will join Dentons from EY, where she has had a highly distinguished 35-year career in a variety of executive leadership roles, most recently as Global Vice Chair. She will succeed Elliott Portnoy, the founding Global CEO, who has served since the Firm’s launch in 2013.

As one can imagine would happen over a 35-year tenure, Barton held numerous positions since starting out as an intern in 1985. New England Tax Managing Partner, Northeast Sub-Area Tax Managing Partner, New York Office Managing Partner, Americas Vice Chair, Tax, Law and People Advisory Services, Global Vice Chair – Tax, Law and People Advisory Services, and her most recent title of Global Vice Chair.

The handover period begins in September and her first official day is November 10.

Do we want to read the obligatory corpospeak quotes? We do.

“Kate has extensive experience in leading a complex and global professional service organization and has an outstanding skillset in managing people, processes and systems. Her successful client service experience, coupled with her thoughtful approach to integration, make her the ideal individual to lead our Firm,” said Elliott Portnoy, Global CEO. “She has my unqualified support, and I am confident she will lead Dentons from strength to even greater strength and success.”

Reflecting on her appointment, Kate said, “I have watched Dentons redefine the legal services landscape with its pioneering business strategy and client offerings. Under Elliott’s leadership, this Firm has differentiated itself with its polycentric approach and integrated cross-border and multidisciplinary client engagements, proving that uniting and operating as one firm is far more impactful. I am looking forward to working with Elliott on a transition and to collaborating with Dentons’ accomplished regional leadership to continue challenging industry norms and adapting to the ever-changing world of technology and innovation faced by law firms and professional service firms around the world in order to deliver excellence for the benefit of our people and our clients.”

Well that sure was a spectacular corporate meat beating.

The post ‘The World’s Largest Global Law Firm’ Snags a Longtime EY Veteran appeared first on Going Concern.