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

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

Grant Thornton Layoffs
byu/HarryNobz inAccounting

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

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

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

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

*insert jerk-off hand motion here*

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

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

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

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

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

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

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

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

Chipman69, you know what to do.

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

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

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

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

What happened, according to NYT:

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

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

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

KPMG has audited Macy’s since 1988.

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

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

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

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

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

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

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

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

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

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

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

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

Ask it if it prefers waffles or pancakes!

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

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

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

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

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

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

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

Related:

University of Northern Iowa brags about its CPA exam performance:

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

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

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

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

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

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

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

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

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

Happy Turkey Day! Be safe.

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

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

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

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

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

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

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

Here’s what NASBA said in their announcement:

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

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

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

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

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

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

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

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

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

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

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

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

Earlier:

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

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

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

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

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

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

Here’s the DOD discussing it directly.

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

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

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

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

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

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

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

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

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

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

Earlier:

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

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

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

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

fLeXiBiLiTy

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

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

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

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

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

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

Have a great week!

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

Welp, they’re announcing a PE deal
byu/User0273649362539506 inAccounting

Text:

Welp, they’re announcing a PE deal

Not looking forward for what’s to come. We are currently very hybrid. Love the current firm culture but now I’m afraid that will change. Does this ever end in a positive light? Public accounting stinks.

These comments are a joy.

Some people are speculating it’s Crowe. I’d say possibly CohnReznick since there’s a rumor they’ve got a PE deal in the works but I don’t think they meet the culture requirement, by all accounts that place is a dumpster fire.

Crowe wasn’t listed as one of the two firms in the top 25 exploring private equity investment in Forbes‘ September piece “Why Private Equity Is Rushing To Buy Up Accounting Firms.” Carr, Riggs, & Ingram is though and it’s been rumored for months that they’re close to making a private equity deal official. The only other firm Forbes listed as “just looking” is Armanino whose minority investment from Further Global Capital Management quietly made the news a few weeks ago.

We’ll see if OP updates. Feel free to speculate in the meantime.

Update: Tips are saying it is in fact Carr, Riggs, & Ingram and that an external announcement will be made Monday.

Update #2: It appears that intel was good. PKF O’Connor Davies announced a deal of their own on the same day.

The post Let’s Speculate Wildly About Which Mid-Tier Firm is About to Announce a Private Equity Deal (UPDATE) appeared first on Going Concern.

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

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

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

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

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

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

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

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

Get that bag, RSM.

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

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

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

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

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

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

This is definitely worthy of a deep dive.

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

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

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

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

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

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

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

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

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

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

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

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

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

EY bought an HR tech consultancy:

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

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

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

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

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

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

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

She #divorced him when he lost his job.

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

— ShoneeKapoor (@ShoneeKapoor) November 8, 2024

As if you need another reason to hate HOAs:

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

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

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

This is not the beginning of a joke…

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

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

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

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

In “Offshoring for CPA firms: The hows and whys,” JofA throws out some figures on outsourcing — both foreign and domestic — based on responses from its MAP survey and sticks to the official line about how the CPA talent shortage is forcing these poor firms to look elsewhere for talent. We’ll ignore how much cheaper offshore talent is compared to their onshore counterparts. We’ll also ignore that firms are laying tons of people off in the US while greatly increasing their headcounts in other countries and not even trying to hide it (see: Firms Really Aren’t Helping This Pipeline Problem, You Guys). Anyway, the AICPA numbers:

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.

As evidenced by the article’s title, it’s mostly advice for firms on outsourcing best practices. Blah blah. But at the very bottom there’s a sort of case study about a firm in Atlanta that consisted of five employees when they started offshoring “part of its expanding load” in 2018. At first they used a third-party vendor in India which meant this vendor handled the hiring and training of offshore staff, starting with one person and eventually expanding to three.

The firm’s team members, who were used to working virtually, understood the importance of setting up workflows, processes, and controls before pushing tax return billable hours offshore. The approach proved successful, and within months the firm had offshored enough work to India to keep three people there busy.

Would really love to hear from the firm’s team members here.

But then…

One year into the contract, the vendor experienced turnover. The firm initially switched to offshoring project by project and then decided to become the employer of record for its India staff. The firm hired one employee in India they had worked with the year before who was groomed to become team leader, recruited eight others, and took over onboarding, training, and managing the offshore employees.

Man, that leader was really putting in work eh? So fast-forward to current day and they’ve got eight staff of their own in India. And they’re offshoring 12,000 hours to India per year. The offshore staff are doing the preliminary work of gathering documents and drafting emails to clients requesting any missing data that is then pushed back to the onshore manager who communicates with the client and ultimately completes the tax return.

According to 20 seconds of Googling, the median salary for a tax accountant in India is ₹ 600,000 ($7,109 USD). Meanwhile, the average for a tax associate in Atlanta is $61,866 a year. Would ya look at that, 61,866 divided by 7,109 is approximately 8.7. Tell us again how this is because of the CPA shortage when the shortage itself was caused in large part by consistently pathetic pay.

Related: Cheap-Ass Firms Are Loving This Outsourcing Thing

The post One Quarter of Firms Say They’re Offshoring, Another 12 Percent Plan to Start appeared first on Going Concern.

Obviously the answer is that they’re sadists and they enjoy fucking with people.

For real though, people have been asking this since the CPA exam was computerized in 2004. The answer is not “because there’s a conspiracy to artificially inflate/deflate passing numbers to keep the credential prestigious” but that questions are weighted so it isn’t as simple as pass/fail for all questions and a passing score of 75 or above doesn’t translate into “75% or more correct answers.” Throw in the additional complication of moving to a new exam format this year and it takes even longer for The Powers That Be to ensure exams are being scored properly. “It is a necessary part of the high-stakes testing process,” says NASBA.

Here’s what the AICPA said about the current atrocious score release schedule earlier this year:

Whenever a new exam is launched, additional analysis is needed before candidate scores can be released. The schedule for score releases in 2024 is like 2011 and 2017, when new versions of the CPA Exam were launched. With the new CPA Exam Blueprints, there is a significant amount of new exam content, and this requires additional analysis after candidates have completed testing.

Ensuring the accuracy and fairness of the redesigned CPA Exam requires careful attention to detail, precision and the utmost care, which is why the AICPA has implemented score holds, which are brief delays in when scores are available following exam completion. These score holds help ensure consistency, fairness and statistical validation of the exam content.

Standard protocol for licensure exams with significant changes involves placing score holds so that test scores can be thoroughly reviewed and analyzed for accuracy and fairness. This process ensures that the test results are reliable and can be trusted to make crucial pass or fail decisions.

It doesn’t happen often but there have been cases of them getting scoring wrong. See this incident with FAR and REG exams taken between Q1 2011 to Q3 2012. But for the most part this tedious and annoying (to candidates) process works as intended. They’re really trying to avoid a hanging chad situation here (old people will understand the reference).

Hey, while we’re here, get a load of this guy.

Comment
byu/Fragrant_Engine6610 from discussion
inCPA

The post CPA Candidates Would Like to Know Why We Can Determine Presidents in a Day But Not CPA Exam Scores appeared first on Going Concern.

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

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

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

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

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

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

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

Grant Thornton’s most recent burnout survey is concerning:

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

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

HR Dive discusses the recent CPE situation at EY:

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

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

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

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

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

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

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

Earlier:

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

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

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

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

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

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

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

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

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

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

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

Earlier: Grant Thornton Merges With Grant Thornton

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Said Deloitte:

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

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

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

Some more key findings:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I looked around at all of the managers and…

— Crown (@DocCrownMedia) October 23, 2024

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

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

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

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

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

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

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

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

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

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

Deloitte is dropping a cool $30 million in Egypt:

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

BDO Hong Kong is taking some heat after layoffs:

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

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

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

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

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

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

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

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

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

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

Of themselves and their investment strategy Lovell Minnick says:

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

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

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

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

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

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

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

Update: Aaaand here it is:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Related:

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

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

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

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

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

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

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

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

Nobody bleeds orange and green like Joe Echevarria!!

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

— Miami Hurricanes (@MiamiHurricanes) October 18, 2024

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

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

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

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

— Joe Echevarria pic.twitter.com/BoyDsUiapF

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

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

— President Joe Echevarria pic.twitter.com/cP66cquQ7D

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In survey news, Deloitte released one this morning.

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

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

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

This guy thinks CISOs need their own GAAP:

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

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

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

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

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

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

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

And Journal of Accountancy article:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Have a great week!

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

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

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

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

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

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

Said the firm:

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

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

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

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

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

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

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

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

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

Related I guess:

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

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

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

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

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

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

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

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

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

Writes Religion Unplugged:

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

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

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

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

Local news is on it.

And in other fraud news, a CFO behaving badly:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

They asked the wrong people.

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

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

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

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

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

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

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

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

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

And PwC pays for some environmental mess:

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

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

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

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

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

Have a great week, everyone!

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

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

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

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

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

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

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

Reports FT:

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

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

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

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

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

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

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

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

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

High Demand and Job Security

In today’s competitive job market, few professions offer the level of stability and demand as accounting. Every business, regardless of size or industry, requires skilled professionals to manage finances, prepare taxes, and provide strategic guidance. And with an annual projected demand of over 125,000 new Accounting positions over the next decade, the time has never been better to make a change.

OK, we’re with you. Granted firms have been laying off people left and right lately — and that’s not even getting into the more insidious silent layoffs — but generally speaking this is true. It could definitely be worse.

Related 2022 post that aged like milk: At Least We Aren’t in Tech, Boast Smug Accountants Who Didn’t Get Laid Off Today

Also the job market sucks right now for a lot of people unless you’re someone with an accounting background living in Manila but you know what, let’s move on.

Global Opportunities

Here’s what they have to say about the global opportunities afforded to the chosen few who take the blessed path of accounting:

Accounting is a truly global profession, with opportunities to work and collaborate across borders. As businesses expand their operations internationally, the demand for accountants with a global mindset and cross-cultural competence continues to rise. Whether you’re interested in working for a multinational corporation, a global accounting firm, or an international NGO, an accounting career can open doors to exciting opportunities around the world.

The biggest global opportunity afforded to accountants in 2024 is interacting with the ever-growing offshore team.

Diverse Career Paths

One of the most appealing aspects of an accounting career is its versatility, they said.

Accountants can choose from a wide array of career paths, ranging from public accounting firms to corporate finance departments, government agencies, non-profit organizations, and beyond. Moreover, within each sector, there are opportunities for specialization in areas such as tax planning, forensic accounting, auditing, financial analysis, and managerial accounting. This diversity allows individuals to tailor their career trajectories to align with their interests, skills, and long-term goals.

Alright, we’ll give them this one. Get through the public accounting gauntlet for two years and you can go do something better.

Intellectual Challenge and Continuous Learning

Do you ever wonder if they get paid off by the AICPA to say stuff like this?

Accounting is far from a monotonous profession. It requires analytical thinking, problem-solving skills, and a knack for attention to detail. As regulations and technologies evolve, accountants must stay abreast of changes and innovations to remain effective in their roles. This constant learning and intellectual challenge ensure that no two days are alike in the world of accounting, making it an ideal field for individuals who thrive in dynamic environments and enjoy tackling complex problems.

It’s also a great career for people who enjoy doing the same thing year after year after year after year after year.

Alright, here’s what we’re here for…lucrative compensation!

Lucrative Compensation

Beyond job security, accounting offers attractive financial rewards. The combination of high demand and specialized skills often translates into competitive salaries and benefits packages. The average annual salary for those with a Master’s degree in accounting is $80,000, whereas Accountants without a Master’s degree only average about $57,000 per year.

Hmm. Lucrative…

$80,000 isn’t a bad deal for someone from 2010 living in a LCOL city clocking a straight 9-5 five days a week. Lemme bust out a handy dandy chart here:

Oh.

Here’s another analysis that @kleib323 did on how much accounting salaries have increased since 2019 for partners and professional staff. Y’all are accountants so we don’t need to explain what the minus sign means in the % change column.

They would have been better off using lifetime earning potential in their argument, the math maths a lot better.

The post Bold Move Listing ‘Lucrative Compensation’ As One of Five Reasons to Pursue Accounting, Montclair State appeared first on Going Concern.

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

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

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

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

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

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

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

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

The motivational poster in the background is

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

PwC’s new UK chief has launched an overhaul of its operations in the country, which will involve creating a standalone technology and artificial intelligence unit, in a move that bosses acknowledged could be “unsettling” for staff.

Yeah, that doesn’t sound good.

The Big Four accounting firm told employees last week that it would embark on a reorganisation of areas of the business affecting about 2,700 staff and partners, adding that it was part of its “new vision to become the pre-eminent firm”, according to a document seen by the Financial Times.

Under the plan, PwC will create a “digital delivery unit” focused on tech innovation, AI engineering, cloud and data. The firm will also overhaul parts of its consulting, deals, risk and tax practices by moving and merging certain functions, creating six new teams.

This story was mistakenly left out of Friday Footnotes so putting it here instead. The AICPA is putting in work for taxpayers affected by Hurricane Helene:

The IRS announced relief for taxpayers in all or part of seven states that Hurricane Helene damaged (IR-2024-253). The AICPA, which requested IRS relief in a comment letter, on Thursday also requested filing extensions from the Financial Crimes Enforcement Network (FinCEN) related to the filing of beneficial ownership information (BOI) and reports of foreign bank and financial accounts (FBAR) for major disaster victims.

The IRS is providing disaster relief for individuals and businesses affected by Hurricane Helene, including all of Alabama, Georgia, North Carolina, and South Carolina. The relief also covers 41 counties in Florida, eight counties in Tennessee, and six counties and one city in Virginia.

BDO unironically released a survey about what clients expect from their audit firms.

The inaugural 2024 BDO Audit Innovation Survey, released today, finds that companies increasingly expect their audit firms to leverage advanced technologies like AI to enhance the audit process, believing that this will lead to a higher-quality audit. However, survey results also indicate that companies believe working with experienced, effective audit professionals is just as important as ever, even with the advent of new technologies.

Highlights:

• Finance leaders believe technology can improve audit quality: Just over half of respondents anticipate technology will enhance audit quality (54%); however, finance leaders continue to place high importance on auditor industry knowledge and professional skepticism as contributors to a high-quality audit.
• Mindfully deployed technology unlocks new levels of trust: 63% of senior finance leaders say trust is somewhat or significantly enhanced for them and their key stakeholders when auditors use advanced technology, and 64% say they look for a firm to use AI before even engaging with an auditor.
• Finance leaders will leverage AI to supplement the talent shortage: Although recruiting experienced accountants is the top strategy for companies grappling with the labor shortage, 61% plan to improve workforce inefficiencies with AI.

Cool, now do one about offshore work.

I learned something new today thanks to the Zoomers on TikTok obsessed with Lyle and Erik Menendez. Apparently their dad’s dad owned an accounting firm in Cuba:

José Menendez came to the United States as a penniless teenager and was determined to succeed, demanding excellence of himself and later his two sons, Lyle and Erik. However, the Menendez brothers would eventually say that drive for prestige and fortune came with a dark side that nobody knew about—leading them to take deadly action.

José Menendez was born in Havana, Cuba, in 1944. According to crime researcher and author Rachel Pergament, his father was a soccer player who owned an accounting firm, while his mother was a star swimmer and member of the country’s sports hall of fame. He had two older sisters, Terry and Marta.

AND their dad got his first job at what would eventually be PwC:

Now with a family to support, José was more determined than ever to succeed in America. According to The Los Angeles Times, he picked up his first professional job at the Coopers & Lybrand accounting firm. One of his clients, Lyon’s Container Service in Illinois, was so impressed by his work that the company hired him away to become its comptroller. Within three years, José was company president.

Well I guess I need to force myself to watch one of these new documentaries because I was a kid when the Menendez brothers’ trial happened back in the 90s and certainly wouldn’t have been interested in their dad getting his start in Big 4. The Big 4 for me back then was Mountain Dew, Doom, Nuthin’ but a ‘G’ Thang, and sleeping until noon.

Did you guys see this thing with a Deloitte principal leaking a text conversation he had with JD Vance back in 2020? We really should write it up. Well now apparently Deloitte is getting some heat from the red side, reports Washington Post:

Republicans backing Donald Trump are threatening Deloitte, a consulting firm that is one of the federal government’s largest business partners, with the loss of billions of dollars in contracts because an employee shared messages from 2020 in which GOP vice-presidential nominee JD Vance criticized the former president’s record.

…

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

When WaPo first reported it they didn’t name the principal — it’s Kevin Gallagher (don’t worry that cat has been out of the bag for a while) — so Breitbart wrote this on September 27: Exclusive — Deloitte Consultant Behind Ethically Questionable Leak of JD Vance Communications to Washington Post.

This could get messy.

EY is still dealing with headaches related to its work on NMC Health. If you can call it work. FT:

EY missed a chance to spot fraud promptly at collapsed hospital administrator NMC Health because it failed for seven years to access a key financial register, according to a $2.7bn legal claim brought by administrators.

A skeleton argument prepared for a procedural hearing at London’s High Court on Friday said the auditor would have “quickly” identified the alleged fraud that led to NMC’s collapse if it had secured access to the company’s general ledger. Inspecting the general ledger — a record of all a company’s financial transactions — is regarded as a basic yet critical task in an independent audit.

Earlier:

Young professionals at PwC Belgium will be driving to and from the client site in new Mini Coopers:

According to PwC Belgium, the procurement is likely to enable the company to meet its fleet emission targets faster than initially assumed. In 2021, the Belgian PwC subsidiary committed to reducing the emissions of its vehicle fleet by 20 per cent every two years – with the aim of being emission-free by 2030. By phasing out 200 BMW 1 Series and purchasing new electric Minis for the company’s young professionals, it could now reach its target as early as 2028.

[M]ore than three-quarters (77%) of its vehicle fleet is now electric or partially electric. However, the company does not state the total number of cars in its fleet. A total of 200 Mini Cooper electric vehicles will be delivered by the end of the year. At a recent event organised by manufacturer Mini Belux and PwC Belgium, almost 160 young employees were welcomed in Vilvoorde to introduce them to the vehicle and hand over the keys.

Why don’t all PwCs give out Mini Coopers? It’s perfect!

I think that’s enough for now. Let me know by email or text if you spot a story we should write about, have a tip, or just want to share an observation on the current state of the accounting profession. I will be deeply engrossed in Silent Hill 2 beginning tomorrow but promise I’ll get back to you.

Have a great week! That exclamation point I meant.

The post Monday Morning Accounting News Brief: Ruh Oh, PwC’s Restructuring; Boycott Deloitte? | 10.7.24 appeared first on Going Concern.

How X is feeling.

TurboTax states they’ll beat your last preparer’s 2023 price by at least 10% if you’ve got a receipt. Full Service currently starts at $129 for simple filers.

Has anyone worked as a TurboTax live expert? Let me know, I’d be curious to hear your experience.

The post Weekend Discussion: TurboTax Declares Itself Direct Competition of Tax Pros appeared first on Going Concern.

Text:

It has come to our attention that a “student-generated salary transparency spreadsheet” is being circulated, which may contain confidential information from offer letters. I am writing to remind you of the importance of maintaining confidentiality, particularly regarding sensitive personal and professional details.

As you know, our industry places a high value on confidentiality. Every day in the field of accounting, you will be entrusted with clients’ sensitive information, and they will rely on you to protect it. Sharing specific details from offer letters, including salary and benefits, is not only unprofessional but can also have serious consequences for you and others [Ed. note: By “others” this ethically compromised shill means accounting firms that would much prefer to cheat you]. Therefore, I ask that you cease using and sharing any such spreadsheets immediately and refrain from disclosing specific compensation details for any reason.

You may continue to do general research and use past outcome reports to make informed decisions on what you wish to say in your negotiation session. I highly recommend making an appointment with me before navigating this discussion.

As Aspiring CPAs, let’s make better decisions going [cut off]

So where exactly in the AICPA Code of Conduct does it forbid this activity? Granted I haven’t read the whole thing in years. If it’s on the same level as clients’ sensitive information, it should be immediately following the section on client confidential information. Except that would be ILLEGAL.

Read the National Labor Relations Act, prof.

Under the National Labor Relations Act (NLRA or the Act), employees have the right to communicate with their coworkers about their wages, as well as with labor organizations, worker centers, the media, and the public. Wages are a vital term and condition of employment, and discussions of wages are often preliminary to organizing or other actions for mutual aid or protection.

The only employers exempt from this are:

• Federal, state and local governments, including public schools, libraries, and parks, Federal Reserve banks, and wholly-owned government corporations.
• Employers who employ only agricultural laborers, those engaged in farming operations that cultivate or harvest agricultural commodities or prepare commodities for delivery.
• Employers subject to the Railway Labor Act, such as interstate railroads and airlines.

Companies that have a minimum of ONE contract with the government — so, most consulting firms — additionally fall under Executive Order 11246 which prohibits federal contractors and subcontractors from discharging or otherwise discriminating against their employees and job applicants for discussing, disclosing, or inquiring about compensation.

Generally speaking, any business or organization that (1) holds a single federal contract, subcontract, or federally assisted construction contract in excess of $10,000; (2) has federal contracts or subcontracts that have a combined total in excess of $10,000 in any 12-month period; or (3) holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount will be subject to the requirements of Executive Order 11246.

Hey kids, be sure you’re not just sharing those salaries amongst yourselves but plug them into Big 4 Transparency, too. Post them everywhere. Print it out and paper the professor’s office. Have T-shirts made and wear them to class.

The post Friendly Reminder That Sharing Your Salary Data is Not Only Legal, It’s Encouraged appeared first on Going Concern.

The Pun Group, LLP, a leading accounting firm specializing in comprehensive audit, tax, and advisory services, announced today that it has relaunched its website to highlight its longstanding industry success and the workplace solutions it offers its wide array of international clientele in advisory, assurance, and business and tax sectors.

“We really aimed to make our website and all of our collective knowledge more accessible to our clients whenever they want to engage with it,” said Kenneth Pun, Managing Partner at The Pun Group. “We worked with our technical team to provide easy and full access to all of our content relating to industries such as manufacturing, healthcare and entertainment and also to thought leadership pieces from our top executives.”

The new website delivers a modern, feature-rich experience that offers contemporary page layouts that enhance user navigation and overall experience. In addition, the website will highlight recent awards won by The Pun Group.

Well we know what awards won’t be appearing on pungroup.cpa:

Earlier this month, The Pun Group announced that it made the 2024 Best Companies Group’s list of the esteemed Best Places to Work SoCal list. The honorees are from a wide array of industries and are companies that have set new standards for creating and developing exceptional work environments. 

According to Best Companies Group, The Pun Group was chosen due to the flexibility of its workplace policies combined with the spirit of excellence inherent in its goals to strengthen its capabilities in audit and advisory services, further enhancing a commitment to delivering exceptional client service.

So what you’re saying is people count at your accounting firm?

The Pun Group just received another industry honor: It has earned the 2024 Clearly Rated Best of Accounting award for providing remarkable service to their clients. The Pun Group, LLP has 20 verified ratings from their clients earning them 4.9 out of 5 stars for its focus on audit, assurance, and business and tax.

Other winners of the 2024 Clearly Rated Best of Accounting award include Armanino, BPM, Forvis Mazars, and a whole bunch of other firms no one’s heard of.

In addition, The Pun Group has been named an IPA 500 firm and an IPA 500 Fastest-Growing firm, based on the 2024 IPA Practice Management Survey. The IPA 500 firms are ranked by U.S. net revenue and are compiled by analyzing 629 responses received this year for IPA’s survey. This is IPA’s 34th annual ranking of the largest accounting firms in the nation.

If only this Portlandia skit were real life.

Just going to leave this here: How to Become a Pun Master in Two Simple Steps

Leading Orange County-Based Accounting Firm, The Pun Group, LLP, Launches New Website Focusing on its Industry Expertise and Workplace Solutions [PRWeb]

The post Accounting Firm Named ‘The Pun Group’ Isn’t Punny at All appeared first on Going Concern.

Jordan Boston here has a beef with the good folks of WMDD&H:

The only non-Google photo for this place is from Jordan.

These people have a beef with the firm too but it’s not nearly as entertaining as some guy getting chased off by a lady with a Sonic haircut for metal detecting on the property.

Before you ask, yes it is a slow news day. The next time we write about this place it will be far more interesting, I promise.

The post This Might Be the Strangest Review of an Accounting Firm Yet appeared first on Going Concern.

Publications around the world continue to discuss the tragic sudden death of a young auditor at EY India and dirt keeps making its way to the surface. This is Latin Times:

Accounting Firm Where Woman Died from ‘Overwork’ Has Operated for Decades Without a Cap on Work Hours

Soon after Shailendra Pol, Additional Labor Commissioner for the Indian state of Maharashtra, began the investigation, he noted that EY’s registration under the state’s Shops and Establishments Act was not current. The permit is required to help regulate how many hours an employee works – nine hours per day and 48 hours per week.

While EY had applied for the registration in February 2024, it was rejected because the company had not applied since 2007. The office was given a total of seven days to address its non-compliance.

More from Reuters: Probe into EY Indian employee’s death finds office lacked labour welfare permit

Related to this, The Institute of Chartered Accountants of India (ICAI) has established a dedicated group to recommend ways to improve work-life balance and reduce stress among Chartered Accountants.

This recent r/CPA vent post isn’t being received too well (“Stop with the xenophobic drivel.”):

US CPA doesnt mean anything now thanks to AICPA

Btw, did u know AICPA is allowing anyone from overseas to take United States CPA exams in their countries? Yes the same United States CPA designation u guys are studying for.. They opened up testing centers all around India in 2020 and Philippines in 2024 and allowing people there without any US college credits to sit for exams. Once they pass they will earn the same US CPA license so ur cpa license doesnt mean a damn thing in couple of years. Also big fuck u in the face is that India only require 120 hours of college credits (none has to be from us colleges) to test for US cpa. This career is going to be like a sweatshop here in 3-5 years once the job market is full of US CPAs from overseas who are happy to do this job for 25% of US salaries

Edit- this is against AICPA selling US CPA licenses overseas to benefit big american accounting firms and PE corporations buying up accounting firms here in USA. AICPA is not looking out for accountants here in USA and their actions show they are in beds with US firms to get cheap labor. This post is not to say people overseas are bad or not good at accounting.

A tale of two headlines.

The Telegraph:

Deloitte partners suffer £48,000 pay cut

Deloitte cut its UK partners’ pay packets by £48,000 in the last financial year as it sought to promote more people to its senior ranks.

The “big four” firm said average partner pay was down to £1.012m for the year to the end of May, compared with £1.060m in 2023. It said this reflected the fact it had been increasing its number of people in senior posts, with 80 of its employees promoted to partner over the past 12 months.

£48,000 = about $64k USD.

Financial Times:

Deloitte UK partners pocket £1mn despite slowdown

Deloitte’s UK partners took home about £1mn on average for the fourth year in a row, despite the Big Four firm suffering a sharp slowdown in revenue growth due to waning demand for its advisory services.

Partners received payouts of £1.01mn on average for the year to the end of May, 5 per cent less than the previous year, following an increase in the number of equity partners who share in the firm’s profits. Its top ranks swelled from 714 last year to 749, while the profit pool to be shared between them remained flat at £756mn.

Deloitte is the only Big Four firm in the UK to report an average partner payout higher than £1mn in the last two financial years.

Yeah, don’t think they’re too worried about missing out on that $64,380 this year.

Elsewhere in the Big D ecosystem, Deloitte India wants to hit $5 billion in revenue by 2030 (which btw is about five years away). They’re currently at $1.19 billion.

Accounting giant Deloitte has set an ambitious target to quadruple its revenue from its India operations to $5bn by the year 2030.

Romal Shetty, the CEO for South Asia, in an interview with Indian news agency PTI, revealed the company’s aspiration to become the preeminent leader in professional services.

During FY23–24, Deloitte India’s revenue reached the Rs100bn milestone, a significant 30% increase.

Former EY top dog Carmine Di Sibio has a new item added to his robust dance card:

Advent International (“Advent”), one of the largest and most experienced global private equity investors, today announced the appointment of former Ernst & Young LLP (“EY”) Global Chairman and CEO Carmine Di Sibio as an Operating Partner. Di Sibio will play an active role in helping the firm identify, source and execute new deals in the business and financial services space and will work closely with Advent’s team and current portfolio of investments.

“We are thrilled to welcome Carmine to our growing roster of talented, specialized and hands-on Operating Partners,” said Chris Egan, Managing Partner at Advent. “After a distinguished career of nearly four decades at EY, Carmine brings an incredible wealth of knowledge and expertise in the professional services, financial services and technology industries, which we believe will be invaluable as we continue to expand our investments in this space. We are excited about the opportunity to leverage Carmine’s experience to drive even further growth and innovation across our firm and portfolio.”

Di Sibio currently holds director positions on the boards of PayPal and Prudential Financial, as well as playing an active role in the World Economic Forum.

Two students from the University of Missouri’s Robert J. Trulaske, Sr. College of Business discuss their experiences with the KPMG Global Internship Program:

Ryan Klostermann and Katie Mitchell were among just 25 interns selected from a pool of 650 applicants nationwide. Klostermann gained valuable experience in Aberdeen, Scotland, while Mitchell completed her four-week internship in Malaysia. KPMG firms operate in 143 countries and territories across the globe, offering audit, tax and advisory services.

China told PwC to get their shit together and not screw up again, says South China Morning Post:

China’s vice-finance minister met the global chair of PwC in Beijing, after the accounting firm’s mainland unit was slapped with a hefty fine and suspended for six months, according to a finance ministry statement on Monday.

Vice-Finance Minister Guo Tingting told PwC’s global chair Mohamed Kande during their meeting on September 19 that he hoped the Big Four firm would strictly abide by China’s laws and regulations, and adopt effective measures to correct mistakes, the statement said.

ThinkChina wonders out loud if PwC will be able to pull off this reasonable request in this long read:

[Big read] Colluding in deceit: Will PwC get a second chance in China after the Evergrande scandal?

Peng Shugang, a lawyer at China Commercial Law Firm (Shanghai), told Lianhe Zaobao that the penalty document from the MOF used the phrase “aware of” 21 times and “should have known” five times, while the CSRC’s penalty statement used the phrases “failed” or “completely failed” five times. Indeed, both agencies believe that PwC’s actions in auditing Hengda showed obvious intentional wrongdoing and gross negligence.

Professor Mak Yuen Teen of the National University of Singapore (NUS) Business School said that the regulatory accusations suggest that it was not just a case of audit failure due to a failure to follow proper audit procedures or exercising professional scepticism, but that of “collusion with the client and likely not limited to just a few staff”.

UK-headquartered PwC is one of the Big Four accounting firms and the highest-earning auditing institution in China in 2022. So, what drove it to take such a huge risk and condone, or even facilitate, Evergrande’s financial deception?

Earlier: China Puts PwC in the Punishment Corner For Six Months and Confiscates ‘Illegal Gains’

Thomson Reuters talked to a guy with all the letters after his name about the future of the audit profession:

A conversation with Jeff Forrestall, CPA, CFF, ABV, CVA, PFS

Q: Are you seeing shifts related to training, recruitment and retention in the audit industry?
Jeff Forrestall: We’ve had to look around outside of the traditional path. I have a couple of attorneys on staff and one of my auditors is an attorney. Great hire. Never had an accounting class in her life.

I have a couple of STEM majors who don’t have any kind of background. Younger prospects have jumped jobs a lot due to COVID, so they don’t have the background we need.

We’re looking for more experienced people. And we’re actually home-growing them ourselves with the AuditWatch program. We make everyone go through it.

Long story short, the industry is changing. National and regional firms are traveling auditors to death.

Starting next year, we will work a 40 hour workweek. Our audit groups don’t travel. We’re the only ones because we’re trying to attract and retain people. So within the last six months, I’m seeing a lot of auditors are applying to us again.

We like you, Jeff.

Adviser Joseph Floyd discusses the PCAOB’s new quality control standard in Bloomberg Law:

The new requirements are akin to combining the mandate to document, test, and certify the effectiveness of a public registrant’s internal controls under Section 404 of the Sarbanes-Oxley Act—the law that created the PCAOB—with creating an audit committee equivalent for oversight of an audit firm’s quality control system.

Section 404 greatly improved the quality of financial reporting for public registrants and lessening restatements, and QC 1000 has the potential to improve audit quality and lessen audit deficiencies. The need for improvements in audit quality is obvious when reviewing the growing deficiency rates reported for the industry based on PCAOB inspections.

The concept of an independent oversight function for audit firm quality isn’t new. Individuals may recall the Volcker plan in early 2002 to save Arthur Andersen in its final days. The plan involved former Federal Reserve Chair Paul Volcker leading an oversight function for Andersen’s audit quality. The Volcker plan never happened but now, decades later, the concept will become reality for the entire audit industry.

For the new quality control requirements to reach their full potential, the external function’s role must be highly respected within the audit firms; for it to be most effective, recruiting individuals who will be independent is critical.

Aaaand that’s plenty of news for now. Please let me know if you spot something interesting, have a tip to share, or just want to complain, complaining is allowed too. Encouraged, actually. Reach me via text or email, or hit us up on the artist formerly known as Twitter. Byyyye.

The post Monday Morning Accounting News Brief: EY Didn’t Have a Labor Permit; Deloitte Partners Allegedly Suffer But Not Really | 9.30.24 appeared first on Going Concern.

These are CPA Evolution pass rates for the first and second quarters of 2024. If you have working eyes, you’ll see Tax Compliance and Planning (TCP) has an obscenely high pass rate; 82.36% for Q1 and 75.67% for Q2.

I’m actually glad they covered this in the webinar because I’d wondered myself if TCP was just crazy easy or what. 82.36% is ridiculous.

The benevolent overlords of the CPA exam like to say that pass rates are not indicative of easier or harder exams but rather a reflection of the preparedness of candidates for any particular testing window. Meaning pass rates are higher when candidates are better prepared. To demonstrate this, I lifted this graphic of CPA exam section pass rates from Gleim that covers 2010-2023. Pay special attention to the red line representing BEC (RIP):

Did BEC suddenly get hard in 2023 when it went from a 60% pass rate in 2022 to about 47%? No. I mean, probably not. What did happen was a ton of people rushed to take it before the year ended because any active candidate who hadn’t passed BEC by the launch of CPA Evolution in January 2024 was going to have to choose one of the new disciplines and ain’t nobody got time for that. We can safely assume that many of these people weren’t well prepared thus the section’s pass rate tanked.

Looking at pass rates for 2023, we see a very predictable drop off at the end of the year across all sections except AUD. Again, expected. It’s the end of the year, people are distracted by the holidays, and with CPA Evolution coming around the corner you had a higher number of candidates rushing to sit.

Do they make FAR even harder at the end of the year? Unlikely. But you do get a lot of people who have been dragging ass all year and want to squeeze in a section once it dawns on them that the year is almost over. Those people tend not to be overly prepared.

Back to the topic of TCP. In the NASBA webinar, Joe specifically said that TCP’s pass rate is higher — for now — because “a smaller number of well-prepared candidates did really well” on it in Q1. The AICPA even mentions this on their website:

In review and analysis of candidate performance across Discipline Exam sections in the 24Q1 testing window, the AICPA and the Board of Examiners noted TCP candidates were generally better prepared to take TCP than the BAR candidates were to take BAR and ISC candidates were to take ISC.

If you don’t know, BAR is FAR’s slightly less intimidating cousin. And contains cost accounting which so many people struggle with. So of course candidates didn’t kill it on BAR.

In the webinar, Joe added that he thinks TCP pass rates will go down over time as things normalize. Meaning the hardcore super studiers got it out of the way already, now it’s up to the average CPA exam candidates to take a stab at it.

All this to say, don’t take TCP just because it has the highest pass rate of the disciplines by far. Take it because you fucking love tax.

Related:

The post CPA Exam Tip: Don’t Choose TCP Just Because It Has an Insanely High Pass Rate Right Now appeared first on Going Concern.

Tinfoil hat – Personally feel like it’s a money grab, AICPA/NASBA/State Boards purposely don’t tell you what questions you got wrong and how they grade the tests so it’s not about application of what you know, it’s more about memorizing as much as you can while hopefully getting lucky on what questions you get on the exam. They’re hoping you fail at least once so they can make more money off it. If they cared about actually testing you on accounting principles and knowledge, they’d remake the test to be standardized, but with a large question bank, and inform you on how it’s scored and what you got right/wrong each time. But they don’t because they want you to keep taking it until you blindly pass.

The question they were responding to was why does FAR have such a terrible pass rate. For Q1 2024, FAR has the lowest pass rate of the core exam sections at 41.92%.

Core Exam Sections

• AUD: 44.63%
• FAR: 41.92%
• REG: 63.42%

Check out that Business Analysis and Reporting (BAR) pass rate tho:

Discipline Exam Sections

• BAR: 42.94%
• ISC: 50.93%
• TCP: 82.36%

But let’s address the tinfoil hat theory. If you aren’t aware, NASBA publishes an annual report every year. In this report, we can see total revenue broken down by revenue source. This is from 2023 [PDF]:

Keep in mind 2023 revenues were temporarily inflated as a result of candidates rushing to sit for the exam before CPA Evolution launched in 2024.

And 2022:

Apologies for the potato quality screenshot, that’s how it looks in NASBA’s PDF.

And let’s revisit 2021, a recovery year that followed significant revenue hits in 2020 due to lockdowns and Prometric closures on top of declining CPA examination numbers. This one is also potato quality unfortunately.

There’s a bit in the 2021 annual report that I think is relevant if we’re going to be donning our tinfoil hats. Said NASBA of 2021 revenue:

Total revenue in fiscal 2021 increased by 27.2% from fiscal 2020. Most of this increase is from examination-related services. This revenue rebounded in fiscal 2021, after a decline in the prior year, due to the effects of the pandemic. One-time anomalies, such as the extension of notice to schedule expiration dates from fiscal 2020 into fiscal 2021, along with other pandemic-related circumstances, brought upon significant swings in revenue between fiscal 2020 and fiscal 2021. In addition, expanded testing opportunities to assist CPA Examination candidates living in countries outside the United States increased examination-related international testing revenue. The increase in this service is shown in the international section volume on the previous page.

It was announced in early 2020 that candidates in India could sit for the CPA exam at eight Prometric testing centers across the country without having to leave home. Well, they’d have to leave their home. Just not their home country. At the time, NASBA said the decision was driven in part by concern for candidate safety related to the pandemic as if this decision was made in March 2020 and implemented the following month and not something that had been in the works long before the Rona existed:

At the time of the announcement they said:

During this extraordinarily challenging time, we know you have many concerns — the health of your families and friends, your coworkers and your communities. The Coronavirus pandemic has affected all of us in ways we could not have imagined. Nearly overnight, the world has changed.

Amidst this disruption, we want to help alleviate one concern you may have — taking your U.S. CPA Examination. We know you have dedicated an incredible amount of time preparing for this next step in your professional development. We also recognize that current travel restrictions, test center closures and other factors make it difficult or impossible for you to take the U.S. CPA Examination as planned. So, to support you on your pathway to CPA licensure, and to maintain your health and safety, we will now administer the Exam in India at eight Prometric test centers (Ahmedabad, Bangalore, Calcutta, Chennai, Hyderabad, Mumbai, New Delhi and Trivandrum). We hope the convenience of taking the Exam in your country eases some of your burden while you think about your family, friends and colleagues.

Sure, they could intentionally fail domestic CPA candidates to pump up those examination fees — which, by the way, have increased over the time period discussed here both nationally and in some states — but wouldn’t it be more lucrative in the long run to open up CPA exam testing to international markets like they just did in the Philippines? It’s not like they have to personally build testing centers, Prometric is already set up abroad.

Since international CPA exam testing was first launched in 2011 with Japan, Bahrain, Kuwait, Lebanon and the United Arab Emirates, many more countries have been added. This is the full list as of September 2024:

• Bahrain
• Brazil
• Egypt
• England
• Germany
• India
• Ireland
• Israel
• Japan
• Jordan
• Kuwait
• Lebanon
• Nepal
• Philippines
• Republic of Korea
• Saudi Arabia
• Scotland
• United Arab Emirates

I’ll see if I can dig up some numbers on international CPA exam testing revenue. Then we can really get the foil burning.

The post Unsubstantiated Conspiracy Theory of the Day: The AICPA Wants You to Fail the CPA Exam appeared first on Going Concern.

ICYMI: the weekend discussion was about firms acting like assholes and making it that much more difficult to seduce the next generation of accountants to the profession. Shocking. The words “circling the drain” come to mind. Go weigh in if you like.

Jack Castonguay, who used to be a favorite follow of ours on Twitter before he dipped out from the platform in protest, has written about FTX for CoinDesk:

In situations like this, it’s always easy to play Monday morning quarterback and say this could have happened to any auditor and any client. But here, the failure was idiosyncratic. Prager Metis’ audit failed, and it failed because they didn’t mean the minimum standard for due professional care. And there were signs aplenty. FTX apparently kept its accounting record in Slack channels, personal messages, and QuickBooks. QuickBooks is a fine tool if you are a small business owner just starting out. It’s an unacceptable tool for a complex currency exchange worth billions and should have set off alarm bells for the auditor. Yet it didn’t. Maintaining records in Slack should have raised red flags. Yet it didn’t. The billions in cash transferred between FTX and Alameda should have raised red flags and led the auditor to investigate the relationship further. And yet it didn’t.

These aren’t complex misunderstandings in gray areas. They are clearly identifiable risks Prager Metis should have identified, responded to, and sought more evidence about to ensure the risk of a misstatement were lowered to a reasonable level. Prager Metis, as charged by the SEC, didn’t apply the appropriate level of skepticism to respond to the risks in large part because they seemed to lack the understanding or have the technical knowledge on crypto clients necessary to meet auditing standards.

The SEC’s actions should be warning signs to accounting firms regardless of their involvement in the cryptocurrency or blockchain industry.

Last week:

Kelly Phillips Erb explains in Forbes why private equity is so interested in accounting firms and what accounting firms are getting out of the deal. There’s a nice little chart of firms that have taken or are considering private equity investment:

Ah, I’d been wondering if CRI inked a deal yet. Guess not. Um, they missed BDO no?

Meanwhile, FT published this opinion piece:

Private equity roll-ups of accounting firms could run into trouble

Another worry, noted by regulators, is that private equity ownership could damage audit quality. Maria Nykyforovych, an assistant professor at George Mason University, says the short-term investment objectives of private equity investors could create damaging incentives. Even though regulators require audit businesses to be controlled by auditors, there might be scope for private equity investors to influence the audit practice through interlocked boards or management service fees.

There is also uncertainty over investors’ end game given the difficulties of initial public offerings and trade sales. Private equity, which mostly began investing in 2021, has barely tested the exit routes. Ownership could end up with pension funds, family offices or even return to the partners.

For now, the most likely outcome seems to be a sale to other private equity firms.

And here’s an editorial from Chicago Tribune with no author credited. They inexplicably used a picture of an ERC call center for the article image. There’s really nothing new here, down to the several paragraphs dedicated to talking about Arthur Andersen.

Editorial: Not every finance major can be an investment banker. We need more accountants.

America’s most famously boring profession is in trouble, and that’s bad news for Chicago.

The city is a hotbed of professional services, including lawyers, consultants and the now-endangered species of certified public accountants. CPAs are essential for financial reporting, advanced tax preparation and other dull-but-important tasks that keep the economy going.

…

Yet another challenge is that these days one of the big trends in the accounting world is the interest of private equity firms in grabbing a piece of the business. For generations, accounting firms mainly have been partnerships, governed in ways similar to law firms and other partner-dominated fields. Private equity is becoming a primary means for retiring senior partners to cash out their stakes. How the influx of these outside owners changes the profession remains to be seen. But CPAs will need to push back against any reputation-damaging schemes from their new overseers to boost revenues, a la Andersen.

Consulting, investment banking and other high-paying finance and tech jobs are still competing for the same up-and-coming number crunchers who used to pursue accountancy. Many of these math-savvy young adults see no reason to invest so much time and money into becoming a CPA.

---

PwC is abandoning a $140 million project to build a brainwashing compound in China because of all that Evergrande stuff.

The ambitious project, located at Haitang Bay in the southern island province of Hainan, was intended to be a training facility for “building trust in leadership,” but recent regulatory action has forced the firm to suspend work on the site.

Designed by the architectural firm Gensler, the Reimagine Park campus spanned 16 acres and was set to be a zero-carbon facility comprising nine buildings connected by autonomous electric shuttles. The facility was planned to host the firm’s Trust Leadership Institute in Asia Pacific and aimed to be a symbol of sustainable and innovative leadership in the region.

The project, part-financed by the local municipality, began construction last year and was expected to be completed towards the end of this year.

The government of India is investigating the sudden death of an overworked young woman working for EY:

Minister of State for Labour Shobha Karandlaje has now announced that the government will be investigating the case, stating that justice must be served and employee safety guaranteed. This move follows widespread criticism, with social media igniting discussions about the “toxic work culture” prevalent in large firms like EY, which is one of the four largest and reputable accounting and consulting firms in the world.

Earlier:

We have a couple updates to the above story I’ll get published ASAP.

Meanwhile, across the pond…EY partner pay is going to be disappointing again this year. Smithers, fetch the violins!

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

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

The Big Four giant, which provides auditing, consulting, tax and other professional services, also told staff across several of its divisions last week that they would not be receiving a salary increase, which many have come to expect in recent years. Among the staff told that they would not be getting a pay increase were several senior managers and directors, who are below EY’s hallowed partner ranks, in the company’s consulting division.

Have they paid off that $500 million Project Everest hole yet?

According to a recent KPMG report, a majority of CEOs think hybrid work will be dead within the next three years. It was fun while it lasted I guess.

A majority (83%) of CEOs surveyed globally predict that companies will shift to require a “full” return of employees to in-office work in the next three years, an increase from 64% the prior year, KPMG said, reporting on the findings of a survey of 1,300 chief executives conducted in July and August.

The report also revealed a generational divide in the executives’ sentiment on the back-to-the-office matter: 87% of CEOs aged 60-69 predicted a full return to office, 83% of those aged 50-59 expect the shift back to the office to happen while only 75% of chief executives aged 40-49 did so, according to the report. Meanwhile more male CEOs (84%) bet on the full return to office scenario compared to 78% of top female executives.

“This year’s findings reveal that CEOs are hardening their stance on returning to pre-pandemic ways of working,” KPMG said.

In other KPMG news, firearm manufacturer Smith & Wesson has a new auditor:

Smith & Wesson Brands, Inc. (NASDAQ:SWBI), a leader in firearm manufacturing, has announced the appointment of KPMG LLP as its new independent registered public accounting firm, effective September 17, 2024. This change comes as part of a competitive auditor selection process conducted by the company’s Audit Committee, which involved several notable accounting firms.

The decision to engage KPMG was based on a comprehensive evaluation of each firm’s capabilities, responsiveness, and fee structures. Notably, this change does not reflect any dissatisfaction with services provided by the previous auditor, Deloitte & Touche LLP, which had served Smith & Wesson since 2014.

Surely that’s plenty of news for the first Monday of fall?

Please let me know if you spot something interesting, have a tip, or watched a good TikTok cat video (my job gets boring) via email, text, or on Twitter. Text is best, my inbox is cursed with hundreds of emails about the top ten cities in which to eat hot dogs and other such public relations trash.

Have a good week, you.

The post Monday Morning Accounting News Brief: What Could Go Wrong with PE; PwC Abandons a Big Project | 9.23.24 appeared first on Going Concern.

But are they? Are they really? Sure, demand for consulting services is down as businesses clench their buttholes in anticipation of a significant economic downturn — sphincters have been getting a workout for like two years now and so far a spectacular crash hasn’t come — but how do you explain all the audit cuts? The official line from firms is “lower than expected attrition” on top of “business conditions” but there’s got to be more to it than that.

More importantly, how can these firms look people in the eye as they recruit on college campuses and go into high schools to preach the joys of a career in accounting when you have headlines like this followed by large layoffs just two months later?

A total coincidence, surely.

Last year BDO told the Financial Times it was the accountant shortage that was driving them to double its offshore workforce. “We are seeing a tremendous talent shortage in the profession,” said BDO USA CEO Wayne Berson to FT. “While it would be nice to just hire domestically, you have got to be open to the notion that maybe someone else has something that you don’t have, that you can buy.”

In early 2023, BDO laid off about 125 people and then leadership hopped on a plane to India to party. Bad optics to say the least.

“Accounting is stable,” the peddlers of the profession say. We say it too. I was working in CPA review back in 2007 when the economy began to sour and as the shit was unceremoniously introduced to the fan in 2008, business was booming. Accounting and government, those are the two industries that consistently hired throughout the financial crisis. Perhaps the only two. Stability has always been the profession’s biggest

Sure there were layoffs back then. Offers occasionally got rescinded, incoming classes of associates were slimmer than the fat years that had come before. But on the whole, unemployment in the sector remained low.

What’s different now in 2024 compared to 2008, besides needing to Klarna your groceries, is that outsourcing was practically unheard of back then. In 2010, less than 2% of PwC UK’s audit work was performed offshore. We’ve heard of firms with as much as 60-70% of work being done needfully these days.

I don’t want to hear shit about an accountant shortage anymore.

The people have told firms what needs to be done to get students interested in accounting, meanwhile firms are thumbing their noses at the idea of paying people with five years of education what they’re worth and holding out for a near future where AI can effortlessly do the work of 25 interns, supervised by offshore seniors getting paid 1/6th of onshore ones. Firms are doubling and tripling down on offshore staff, stretching their tentacles into smaller cities in India because, get this, rent’s too high in Mumbai. This is Reuters in July 2023:

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.

And then you’ve got The Powers That Be who, in their infinite wisdom, are opening up the gates so that foreigners don’t even have to leave their town to be licensed as a Certified Public Accountant in this country. Some 300,000 workers in the Philippines currently answering customer service calls for US businesses are about to be put out of work by AI, that’s a whole lot of bodies to throw at accounting grunt work. The outsourcing industry has its own training programs that can turn an unemployed call center worker into an offshore associate for a US-based accounting firm in a matter of months or even weeks. See where this is going? Nothing against offshore workers, this isn’t their fault.

Of course students aren’t buying what the profession is selling. Look at what the biggest, most profitable accounting firms in the country — and world, really — are doing.

Lemme loop in this comment quick:

Comment
byu/Tiny_Basis1852 from discussion
inAccounting

The experience is being offshored as well. What’s the next generation going to learn if all the work they used to do to cut their teeth is sent overseas?

Maybe in five or ten years when excessive offshoring starts blowing up in firms’ faces things will change for the better. Or maybe that’s a quixotic position to take and we should all start being extra nice to the offshore team because they’ll be the managers some day in the not-so-distant future.

See also:

The post Weekend Discussion: Firms Really Aren’t Helping This Pipeline Problem, You Guys appeared first on Going Concern.

OP says:

I’ve been working here a year in an office in New York and we had a call yesterday that went terribly. I believe the call was supposed to just be a tech training but it devolved into discussion over why this year was the way it was.

The biggest offender was a partner who explained the new PTO change as “now we don’t have to pay people out when they leave which is just good business let’s be real” like… ummmm WHAT?! He basically just admitted they made the policy to screw us over.

After months of rumors, KPMG announced firmwide unlimited PTO earlier this month. It was only a matter of time before some bullshit started coming out.

We all know “unlimited” PTO is a) a scam and b) a good way to avoid having several tens of millions of dollars a year hanging over your head as was stated in the email sent among EY leadership leaked in late 2020 when they made the switch to unlimited PTO. Text from the EY email quoted directly (emphasis ours):

A few key takeaways from the slide deck that support the reason for the change include:

• Provides cost savings of about $36M per year (2019 cost) associated with paying unused vacation at termination.
• Freezes the current vacation lability for the growing number of states with an accruat cap vs. a “use it or lose it approach, which significantly increases cost of paying unused vacation at termination. CA, CO, IL, MA, LA and i have accrual cap 1.5x annual allotment (25% of our people)
• Aligns with One EY, moving personnel to a single vacation policy and away from variances necessitated by varying state laws around treatment of accrued vacation
• Better aligns with culture of trust, flexibility and wellbeing
• Eliminates entitlement mentality and need for carryover of unused time or sense of “loss” by our people
• Positions EY as a “first mover among the big 4, providing a competitive advantage and serving as a differentiator on campus

For your reference, attached are the communication plan and a comprehensive list of questions and answers. Some of the key points above may not be shared with our people (e.g. $36M savings), but as business leaders you to know that this is a significant reason for the change.

Make sure the grunts don’t hear about the cost savings of $36 million that we listed as the first reason for the change! No sir. People know that’s a big reason why a firm would make this switch, you just don’t expect a partner to say that part out loud.

It’s just good business let’s be real!

The post QOTD: “Now We Don’t Have to Pay People Out When They Leave Which Is Just Good Business” appeared first on Going Concern.

While the rest of the world was asking “huh? The what,” NYC-headquartered Prager Metis was buying up “real estate” in the metaverse and putting out press releases about it. In December 2022, Prager Metis put down nearly $35,000 in actual money for this three-story “property” in Decentraland, thus planting a flag on the Metisverse (groan, I know).

Let’s take a tour!

:25 killed me. My soul while watching this be like…

Wrote Kotaku’s Zack Zwiezen of Decentraland in 2022:

Decentraland is a 3D online virtual world that is built around the minting, buying, and selling of NFT items and digital land. It’s technically a game, but it seems about as fun as hanging out in a doctor’s office.

Or an accounting firm office.

It’s also hard to miss the general cheap, cluttered vibe of it all. This glimpse of Decentraland makes it look like a fictional game that was tossed together in a few hours for an episode of CSI: Whatever City, in which the investigators are trying to solve a murder that involves some “new” and “popular” online world. I can see a character actor playing this and going “Yeah, this is where I last saw Sally. Or someone who looked like Sally, we all look like the same crappy digital avatar in here.”

See? Prager was ahead of the curve. Go into any real world accounting firm and it’s the same five or six character models with only slightly customized hair options and different colored shirts.

So what if some assholes on the internet had jokes, Prager Metis was blazing virtual trails! They were providing potential clients “with the expertise needed to navigate the metaverse from a financial perspective” in the metaverse! There’s a 3rd floor you can jetpack to!

And then FTX blew up. FTX hired both Armanino and Prager Metis to audit their 2020 and 2021 financial statements (a totally normal thing to do because who doesn’t love getting a train run on you by auditors) which suddenly put a spotlight on the metaverse’s first accounting firm. When it was all over, restructuring pro and Enron biohazard cleanup leader John J. Ray III, who’d been appointed CEO after FTX went bankrupt, had this to say about the state of FTX:

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as I occurred here,” he said, incredulously. Again, this guy mopped up Enron. Remember that.

See also: No One Should Be Surprised to Learn FTX Used QuickBooks

We pretty much forgot that Prager Metis got in trouble for the whole FTX thing until now after seeing this press release the SEC put out the other day.

The Securities and Exchange Commission today announced that Prager Metis CPAs, LLC (Prager) and its California professional services firm, Prager Metis CPAs LLP, (collectively, the Prager Entities) agreed to pay $1.95 million to resolve two actions alleging misconduct in its audits of the now-defunct crypto asset trading platform, FTX, and auditor independence violations.

In one of the actions, the SEC alleges that Prager misrepresented its compliance with auditing standards regarding FTX. According to the SEC’s complaint, from February 2021 to April 2022, Prager issued two audit reports for FTX that falsely misrepresented that the audits complied with Generally Accepted Auditing Standards (GAAS). The SEC alleges that Prager failed to follow GAAS and its own policies and procedures by, among other deficiencies, not adequately assessing whether it had the competency and resources to undertake the audit of FTX. According to the complaint, this quality control failure led to Prager failing to comply with GAAS in multiple aspects of the audit—most significantly by failing to understand the increased risk stemming from the relationship between FTX and Alameda Research LLC, a crypto hedge fund controlled by FTX’s CEO.

The SEC’s complaint charges Prager with negligence-based fraud. Without admitting or denying the SEC’s findings, Prager agreed to permanent injunctions, to pay a $745,000 civil penalty, and to undertake remedial actions, including retaining an independent consultant to review and evaluate its audit, review, and quality control policies and procedures and abiding by certain restrictions on accepting new audit clients. The settlement is subject to court approval.

Will the independent consultant be strapping on a VR headset and holding classes for leadership in Decentraland? I sure hope so. It’ll probably be more interesting than Decentraland raves:

This is the #metaverse… A live rave happening right now in @decentraland for the upcoming @LightbulbmanNFT release by #BjarneMelgaard. Music from @feedelity @prins_thomas @mightbetwins #NFTdrop #rave #virtualevent #NFTCommunity pic.twitter.com/aC4WYRbgH9

— Alex Moss (@alexmoss) January 20, 2022

Don’t you hate when literally everyone at the rave is in a K-hole at the same time?

“Effective investor protection requires a collaborative approach that includes both regulators and gatekeepers such as auditors. To fulfill their role, auditors must, among other things, be independent, exercise due professional care and skepticism, and comply with all applicable professional standards. As we allege in these enforcement actions, Prager Metis fell short in all of these areas,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “Because Prager’s audits of FTX were conducted without due care, for example, FTX investors lacked crucial protections when making their investment decisions. Ultimately, they were defrauded out of billions of dollars by FTX and bore the consequences when FTX collapsed. By limiting Prager’s ability to take on new business and by requiring it to retain an independent compliance consultant, today’s resolutions not only enhance investor protection, they also serve as a warning to audit professionals that are not appropriately meeting their gatekeeping obligations.”

NGL reading that quote from Gurbir S. Grewal was more fun than watching that 37 second rave clip.

“Once more we see an entity, lured by the siren song of the crypto asset markets, cutting corners on its obligations to comply with the law. As we have seen time and time again, these shortcuts do not pay. They do not pay for the entities who take them or for the multitude of victims that this misconduct leaves in its wake,” said Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets and Cyber Unit. “Our dedicated staff will continue to pursue investigations of those who may have violated the law, even after other wrongdoers have been identified.” I like the cut of your jib, Jorge.

Oh wait there’s more:

The SEC today also announced that the Prager Entities agreed to the entry of final judgments to settle separate, previous charges for violating auditor independence rules and for aiding and abetting their clients’ violations of federal securities laws. The SEC’s complaint alleged that, between approximately December 2017 and October 2020, the Prager Entities improperly included indemnification provisions in engagement letters for more than 200 audits, reviews, and exams and, as a result, were not independent from their clients, as required under the federal securities laws.

We wrote about that before: Prager Metis Just Got Thoroughly Boned By the SEC For Hundreds of Independence Violations

Alright, I’m done.

The post The Metaverse’s First Accounting Firm Won’t Be Paying These Big Old SEC Fines in Crypto We Assume appeared first on Going Concern.

She writes:

Anna would retum to her room utterly exhausted, sometimes collapsing on the bed without even changing her clothes, only to be bombarded with messages asking for more reports. She was putting in her best efforts, working very hard to meet the deadlines. She was a fighter to the core, not someone to give up easily. We told her to quit, but she wanted to learn and gain new exposure. However, the overwhelming pressure proved too much even for her.

Everything was new to her-the organization, the place, the language and she was trying very hard to adjust. You should show some consideration to new employees, Instead, the management Took full advantage of the fact that she was new and overwhelmed her with both assigned and unassigned work This is a systemic issue that goes beyond individual managers or teams. The relentless demands and the pressure to meet unrealistic expectations are not sustainable, and they cost us the life of a young woman with so much potential

She goes on to call EY out for being a “company that speaks of values and human rights” but that didn’t even send anyone from the firm to the funeral of a recent starter:

Anna’s death should serve as a wake-up call for EY. It is time to reflect on the work culture within your organization and take meaningful steps to prioritize the health and wellness of your employees. This means creating an environment where employees feel safe to speak up, where they are supported in managing their workload, and where their mental and physical well-being is not sacrificed for the sake of productivity.

No one from EY attended Anna’s funeral. This absence at such a critical moment, for an employee who gave her all to your organization until her last breath, is deeply hurtful. Anna deserved better, and so do all the employees who continue to work under these conditions. My heart aches not just for the loss of my child but also for the lack of empathy shown by those who were supposed to guide and support her. After her funeral, I reached out to her managers, but received no reply. How can a company that speaks of values and human rights fail to show up for one of its own in their final moments? Becoming a Chartered Accountant involves years of toil, hardship, and sacrifice-not only for the student but also for the parents. Years of my child’s hand work have been snuffled out by just four months of EY’s callous attitude.

The heartbreaking letter ends with:

I hope my child’s experience leads to real change so that no other family has to endure the grief and trauma we are going through. My Anna is no longer with us, but her story can still make a difference

Full letter below as shared by kaay_rao on Twitter.

Update: EY made a statement. “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, unconvincingly.

The post Mother Pens Letter Calling Out EY After Her Overworked Daughter Suddenly Passed Away at 26 appeared first on Going Concern.

Can someone help me come up with a Vault-Tec joke for this story? Because I know it’s right there.

"As it stands today, Deloitte is not known as a shipbuilder, nor is it clear it could meaningfully contribute to the construction of submarines."https://t.co/5uB3rr3nFr

— Going Concern (@going_concern) September 14, 2024

Speaking of Deloitte, the UK business is finally entering the modern age and extending equal family leave to dads:

Deloitte is to equalise its maternity and paternity leave allowance in a move that it hopes will help to boost the number of women in its senior ranks.

From the start of next year, new fathers who work at the accounting and consulting group will get 26 weeks of fully paid leave, the same as new mothers. At present fathers can take only four weeks off with full pay after the birth of their child.

“The evidence is clear about the impact of unequal parental leave on working mothers’ career progression,” Jackie Henry, Deloitte’s managing partner for people and purpose, said. “We know that key moment of the birth of a child sets expectations and an allocation of responsibilities for the future, and traditionally that has fallen to the mother.”

Anyone else kinda shocked this wasn’t the policy already? Get with the times, Deloitte.

Financial Review puts a former EY partner’s business on blast, much to his chagrin:

A former EY partner who allegedly took $700,000 in secret commissions while setting up illegal tax schemes for wealthy clients can be named as Peter White, after he lost a long court battle to keep his identity a secret.

The Commissioner of Taxation is suing Mr White in the Federal Court, alleging he promoted three illegal tax schemes to seven clients in the five years to April 2021, according to a claim lodged in August last year.

Mr White fought for more than a year to stop The Australian Financial Review naming him. He lost two attempts to keep his name suppressed but appealed both times. Last week, he gave up his right to a third bid and suppression was lifted on Monday morning.

The former big four firm partner identified companies that had significant tax losses, then ran his client’s profits through those companies to wipe out large chunks of tax payable, the Tax Office alleges. The structure is called a tax access loss scheme. Mr White is fighting the case.

LOL @ this Bigfoot in the wild pic they included in the article.

And another piece: EY partner sued by ATO was Bill Papas’ former adviser

White was ousted from EY in 2022.

PwC China sent a memo to its people after the news broke last week they’d be receiving the worst fine a Big 4 firm has ever gotten in China:

PwC is making “tangible investments” to ensure the Big Four firm has high quality and sustainable business in China, it said in a memo to staff after Chinese regulators on Friday hit the company’s mainland unit with a record penalty.

“We want to recognise that this has been an extremely challenging period for all of you,” said the PwC internal memo issued late on Friday after the regulatory penalty announcement, and reviewed by Reuters.

“The PwC network has also shown continued support for our China firm throughout this period … They are making tangible investments to ensure we have long term, high quality and sustainable business in China,” it said.

“I know that the coming weeks will not be easy as we put in place a detailed remediation plan and begin to position the business for future success,” the firm’s new China territory head, Hemione Hudson, said in the memo.

And in a related story, more clients started bailing after the fine came down on Friday:

PricewaterhouseCoopers lost five fund clients in a day, mainland media outlet The Paper reported, after Chinese regulators hit its mainland unit with a six-month suspension and a record fine over the firm’s audit of failed property developer China Evergrande.

“Such a severe penalty will have a major impact on the confidence of PwC’s remaining domestic clients,” said Pingyang Gao, an accounting and law professor at HKU Business School. “It is very likely that there will be a mass exodus. So it will likely spell doom for PwC’s business in China.”

Earlier:

• Layoff Watch ’24: Things Aren’t Looking Good at PwC China [UPDATED]
• China Puts PwC in the Punishment Corner For Six Months and Confiscates ‘Illegal Gains’

Private equity across the pond is hoping to unload an accounting business for $660 million:

The private equity owner of Evelyn Partners is preparing to split up the wealth manager by selling off its professional services arm, as it looks to cash in on a wave of investor interest in the sector.

Permira, the buyout giant, is hoping to fetch more than £500 million by selling the division, which includes the business once known as Smith & Williamson. It provides professional services including accounting and tax advice.

Permira is rumored to be one of the suitors interested in purchasing a stake in Grant Thornton’s UK operations.

The Times teased this in July:

The private equity owner of Evelyn Partners, one of Britain’s largest wealth management companies, is exploring options to sell down its £1.5 billion stake.

Permira is sounding out advisers to sell its majority stake in the business, whose activities also cover professional services from auditing and tax advice to insolvency, as it looks to cash in on a wave of investor interest in the sector.

A deal could take the form of an outright sale or a break-up, with Evelyn’s accountancy business likely to appeal to other private equity buyers given the current strong interest in the sector.

KPMG is moving to a smaller office in San Francisco. The Chronicle writes:

Accounting giant KPMG has committed to a new, 100,000-square-foot office in San Francisco once its current lease for its longtime home on Second Street expires.

The New York-based company announced Friday that it will relocate to 505 Howard St., a 10-story building in the South Financial District known as Foundry Square III, in September 2026. A spokesperson described its new lease as “long-term.”

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

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

The new office will be almost 40,000 square feet smaller than the one on Second St.

FTX founder Sam Bankman-Fried, who was sentenced to 25 years in prison and ordered to forfeit $11 billion on March 28 of this year, is appealing. Well, his lawyers are:

The lawyers filed papers with the 2nd U.S. Circuit Court of Appeals asking a three-judge panel to reverse Bankman-Fried’s conviction and assign the case to a new judge for a retrial, saying the trial judge “imposed a draconian quarter-century sentence on this first-time, non-violent offender” after they contend he hurried the jury into reaching a one-day verdict to cap off a complex four-week trial.

“Sam Bankman-Fried was never presumed innocent. He was presumed guilty — before he was even charged. He was presumed guilty by the media. He was presumed guilty by the FTX debtor estate and its lawyers. He was presumed guilty by federal prosecutors eager for quick headlines. And he was presumed guilty by the judge who presided over his trial,” the lawyers wrote.

Hartford Business spoke a few bigwigs at Connecticut firms to hear how smaller firms can keep their souls amidst the current wave of private equity investment and merger mania. This is to Drew Andrews, managing partner and CEO of Whittlesey in Hartford:

Firms must embrace new technology that will increase efficiency and workflow, he said, including automation and artificial intelligence, which is already being used in the industry.

“We have to automate processes and stay ahead of technological advancements,” Andrews said. “I’m not just looking at what’s coming down the line next year, I’m looking at 10 years down the road. The firms that don’t modernize will become obsolete.”

Firms would be wise to seek the input of more junior employees on technological advancements.

“The younger generation often has valuable insights into using technology more effectively,” Andrews said.

And that’s the news! Email, text, or tweet if you come across an interesting story or just want to chat. My virtual inbox is always open…because someone keeps forgetting to close the door and any old riff-raff can just wander in.

The post Monday Morning Accounting News Brief: What Could Go Wrong Giving Nuke Power to Deloitte; KPMG SF is Moving | 9.16.24 appeared first on Going Concern.

From the press release they put out today about the proposed CPA Competency-Based Experience Pathway:

Designed to increase flexibility for candidates, respond to market conditions, and protect the public, the pathway allows candidates to meet the final stretch of licensure requirements by exhibiting competencies according to a model framework that has been developed by AICPA and NASBA. The framework was developed with significant input and advice from a diverse cross-section of the profession, including members of an AICPA and NASBA working group made up of practitioners, regulators, academics, and state society leaders.

Recycling this gif from “Did the Anti-150 Hour Crowd Finally Beat the AICPA Into Submission? Looks That Way” because lol:

“The proposed pathway encompasses the perfect mix of flexibility for CPA candidates while maintaining rigor for public protection,” said NASBA President and CEO Daniel J. Dustin, CPA. “We look forward to the input and direction from the 55 U.S. Boards of Accountancy on this important and necessary framework to strengthen the CPA pipeline.”

Let’s remember this is the same group that fought hard to keep the 150-hour rule in place even when everyone else, even academia, was saying the profession should think about ditching or at least modifying it. The 150-hour rule has been successful in artificially inflated Underwater Basket Weaving 101 class lists at universities across the country for two decades, making better CPAs not so much. But sure, let’s talk about “maintaining rigor for public protection” now.

Said Journal of Accountancy in their write-up:

The proposed professional competencies are:

• Ethical behavior;
• Critical thinking and professional skepticism;
• Communication;
• Collaboration, teamwork, and leadership;
• Self-management and continuous learning;
• Business acumen; and
• Technology mindset.

The proposed technical competencies are:

• Audit and assurance;
• Tax; and
• Business and financial reporting.

The competencies, which would be verified in the workplace by licensed CPAs, are expected to take most candidates a year, but there is flexibility in the timing for completion.

Comments on the CPA Competency-Based Experience Pathway are open until December 6. If you have unhelpful troll comments to make or shitposting to do, please do so in our comment section and not the AICPA’s form. I’m serious.

Exposure draft in its entirety below:

Exposure draft: Proposed “CPA Competency-Based Experience Pathway” [AICPA]

The post Benevolent Overlords of CPA Licensure Float Batshit Insane Idea to Prove Competency, Not Just Credits appeared first on Going Concern.

The post Can Anyone Help This Eager Applicant Figure Out Why They Can’t Get an Interview at Deloitte? appeared first on Going Concern.

Imagine thinking this is true#TaxTwitter pic.twitter.com/ClJT86yG6Z

— TaxBirdie (@tax_birdie) September 10, 2024

Thread

The post Dumbass Take of the Day: This Guy appeared first on Going Concern.

“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,” wrote PwC UK Managing Partner Laura Hinton in a memo to PwC’s 26,000 people last week. “This will help to ensure that the new policy is being fairly and consistently applied across our business.” Uh huh. We trust you, Laura.

Reaction to this news has been plentiful across the mediasphere. And not particularly positive:

Is Workplace Trust Dead? A ‘Big Four’ Firm Will Soon Use Location Data to Track Employees [Entrepreneur]

PwC is ‘tipping the balance’ of hybrid working and will start tracking its workers’ locations [Fortune]

PwC tells employees it will use location data to police ‘back-to-office’ rule [CNN]

This one from Inc. is especially interesting: Companies Such as PwC Are Now Tracking Employee Location to Enforce RTO, and It Could Backfire

Writes Chris Morris:

Tracking employee location data is a new way of enforcing RTO policies–and it’s not one without some accuracy risks. The trend of coffee badging has been on the rise this year, where employees scan their badge and go into the office, but only stay long enough to grab a cup of coffee and maybe attend one meeting before leaving early.

…

There’s also the very real potential problem of employees resenting being tracked so closely–and so clinically. (Some 28 percent of employees said they would “consider quitting if RTO policies occurred at their company,” according to the report from human resources software company BambooHR.) That could give an advantage to small businesses and startups that offer employees more flexibility, particularly when it comes to hiring. 

Chris, we’re going to have to tell you something. PwC wants people to quit. The King’s PwC tried to get as many as 600 people to quit so they wouldn’t have to lay them off late last year and as recently as June it told a group of “voluntarily separated” individuals they should fib in their farewell emails to colleagues to make it sound like it was fully their decision to leave this wonderful firm at which they’ve learned so much and met so many great people.

PwC UK, like Big 4 firms closer to home, is being hit with a trifecta of issues: Overhiring a few years ago when everyone started panicking about shortages, a significant decrease in demand for certain advisory services, and higher-than-expected attrition. That last one is important. The business model has a certain amount of turnover baked in and when not enough people leave, it’s either layoffs (or, in PwC’s case, “voluntary separations” which are just layoffs with a better severance package and without icky headlines about layoffs) or you make people hate their job so much they leave. It is quite clear to us PwC is engaged in the latter. The firm not only couldn’t care less if people leave due to this policy change, they want them to leave.

Anyway, Kate Andrews at The Telegraph covered this issue as well and went so far to say PwC is desperate. In ‘The full costs of telling people to work from home are only now becoming clear’ she writes:

“We’re in a war for talent, because we’re busy,” Kevin Ellis, the then-UK chairman of the “big four” accounting firm, told The Times in the summer 2021. Rather than penalise employees for working from home, PwC would try to avoid the threat of pay cuts other companies were making. “A lot of other businesses with the same skills that we need are busy,” he told the newspaper. “I think that’s not something to consider at this stage.”

That stage in the process has come and gone. Three years later, PwC is not only mandating its staff spend more hours in the office and face-to-face with clients, it plans to keep track of them too.

Even the greatest advocates of office working might find this a bit much. It’s one thing to issue instructions to your workbase. It’s a much bigger, rather Orwellian step to physically track them, seemingly to make sure they’re following orders.

From some angles, this might look like a power move from the firm. But it appears, to me anyway, to be an act of desperation. 

She goes on to describe a breakdown of trust, implying that PwC sucks at managing a hybrid workforce (probably at least a little true) and this is how they’re going to manage it.

It seems highly unlikely that PwC’s new policy is going to improve trust and goodwill between the company and its employees, which raises the question – why go ahead with this policy? When PwC took the light-touch approach three years ago, it made a record-breaking profit of £1.2bn, achieved with the vast majority of its staff working from home. Yet last autumn it was reported that PwC’s growth was lagging behind its competitors in the previous financial year.

PwC revenues are due any day now and it’s unclear if partners will once again be taking a hit but we’re going to assume yes given recent decisions, keeping in mind that slower growth is considered a hit. The firm’s 1,000 or so partners took home £906,000 ($1.2 million USD) last year, down from £1 million ($1.3 million) in 2022. In 2019, that number was £765,000 ($999,608). Partners are like vicious dogs with miswired brains, once they taste flesh — in this case, million dollar years — they will crave it. They will do whatever they have to do to get it.

Things have changed since 2021. A lot. Business is slow, people aren’t leaving, and there’s a lot of dead weight sitting on the payroll. RTO mandates are intended to make people quit, RTO mandates with a side of Orwellian tracking will get the job done faster and more effectively.

All without the icky layoff headlines. PwC may or may not be desperate but it’s not for the reason she thinks.

Further reading:

• Survey Confirms What We Already Knew: RTO Mandates Were Intended to Get People to Quit
• Comp Season PSA: If You’re Disappointed, It Might Be Because They Want You to Quit

The post PwC Isn’t Used to Being Called Desperate But Here We Are appeared first on Going Concern.

The pitch:

View this post on Instagram

A post shared by Paul Andon (@bized2052)

The contest is open only to UNSW students over the age of 18 who reside in Australia so no one in our audience get any bright ideas. Don’t think that’ll be a problem anyway.

The winner will receive $5,000 ($3,331 USD); runner up gets $3k and third place $2k.

Accounting in 60 Seconds – Student competition [UNSW]

The post You Couldn’t Pay Me Enough to Make Accounting Sound Cool appeared first on Going Concern.

Here’s a fun read from Business Insider: I’m happy I got laid off from Deloitte. The physical and mental toll wasn’t worth the paycheck.

25-year-old former analyst Cierra Desmaratti, who spent a year at Deloitte before she was laid off, says:

I was onboarded at Deloitte’s Chicago headquarters in September 2021 alongside 80 to 90 fresh hires. I remember looking around at my peers dressed in pressed suit jackets and designer pieces and feeling immediately out of place. The T.J. Maxx clothes I wore had been a splurge, but I no longer felt like they were adequate.

I tried making small talk with those around me and quickly realized appearances weren’t the only way I stuck out. Everyone seemed to be bonding over their big-name colleges and Big 4 internships, exchanging anecdotes I simply couldn’t relate to.

…

At one of my first happy hours, I was sitting at a table with colleagues when a senior consultant remarked that intelligent people wouldn’t bother engaging in silly things like crystals and astrology. Taken aback but eager to engage in some playful discourse, I mentioned I considered myself intelligent but also quite intuitive and spiritual. The table fell silent until the senior consultant awkwardly acknowledged my comment and changed the subject.

That moment, though small, reinforced the idea that my success in the workplace was contingent upon my ability to acquiesce to the social norms. I honestly didn’t feel like there was a way to thrive in a more masculine environment without entirely abandoning my femininity, so I tucked away my spiritual, bubbly side.

While I suspect not many readers can relate to the woo anecdote, surely most can relate to this part:

As the busy season ramped up in January, work became all-consuming. I started working 11-hour shifts and immediately felt myself barrelling into burnout.

I didn’t feel safe confiding in anyone about my workload concerns because everyone around me seemed to wear their burnout as a badge of honor. I’d see my boss work long hours and hear colleagues laugh off the stress, saying, “That’s just Deloitte.”

Related to the above tale, Kimberly Tara, Founder & CEO of The Tara CPA Firm LLC in New Orleans, talks to the Cincinnati Business Courier about her early days in public accounting:

After an abrupt switch to accounting from chemical engineering far too late into my college career, I knew I had finally found my calling. What I didn’t realize was how male-dominated the public accounting world still was; but I soon realized why.

In my third busy tax season, I watched a pregnant manager in the tax department FaceTime her child to sleep for the fifth night in a row. That was the moment that I realized public accounting — more specifically making partner in a public accounting firm — was no longer my goal.

Finance teams have just five years to transform or risk becoming irrelevant, according to a new report by ACCA (the Association of Chartered Certified Accountants) and Chartered Accountants ANZ in association with PwC:

Drawing on insights from over 150 finance professionals and 2,300 survey responses, the report shows that businesses now demand a broader skill set from their finance teams, as retrospective reporting and traditional approaches to planning and forecasting alone no longer meet key decision-makers’ needs. Being pre-emptive is the order of the day. 

The report highlights some ongoing concerns raised by survey respondents:

• A lack of clarity on how finance can add value to the business (38%)
• Finance being seen mainly as a cost center (32%)
• Current technology not meeting the needs of the organization (30%)

CFO wrote up the results of the Jefferson Wells’ 2024 Internal Audit Priorities survey:

More than two-thirds (66%) of internal audit teams say their capabilities do not fully align with their organization’s priorities.

With a large portion of CFOs already outsourcing many of their accounting functions, it’s no surprise that internal auditors have seen a stark rise in organizations using external support to supplement areas where their labor or technology can’t get the job done alone.

Nearly three-quarters (74%) of internal audit leaders say they’re now using external support to meet demands. That’s up 54% from 2023. It’s worth noting that the trend before 2023 was declining slightly year-over-year, down approximately 2% in 2022 and 6% in 2023.

BDO Global has walked away from messy Indian education technology company Byju after the client failed to provide the right paperwork (that sounds way less messy than it actually is, btw), reports Reuters:

Byju’s is fighting several battles including the insolvency proceedings and a $1 billion claim from U.S.-based Glas Trust.

BDO was appointed auditor earlier this year after Byju’s’ former auditor, Deloitte, left the company, citing several issues with the company’s financial reporting.

The auditor said in a letter to the company dated Tuesday that despite “inordinate” delays in filing its financials for the year ended March 2023, management had provided inadequate support to complete the audit.

Byju hit back and said that BDO made the mistake of trying to get the documents from the company’s board, which has been suspended.

The letter should have been addressed to the insolvency professional in control of the firm at the time, the edtech firm said.

Byju CEO Byju Raveendran claimed the auditors requested a big no-no:

Byju’s audit firm BDO had suggested backdating of reports, which the company refused, and their resignation is more of optics, a top official of the edtech firm alleged on Saturday.

“They have asked us to do multiple backdating of reports. All that happened recently. We did not agree. We have nothing to hide,” he said.

ICYMI: EY UK might appoint a woman to lead the firm and of course the media is making a BFD out of this.

In 2023, EY named Janet Truncale as its next chief executive officer. The move was a landmark appointment at the top table of the professional services industry – with none of the Big Four auditing and advisory firms having previously been headed by a woman beyond an interim capacity.

They must mean a Big 4 firm has never had a woman CEO on a global capacity because, uh, Deloitte’s Cathy Englebert exists and she became the first woman to lead a US professional services firm almost ten years ago. Is she still commissioner of the WNBA? remind me to look that up later.

One year on, EY could be about to see the same thing in its UK practice. EY’s UK business is the second-largest firm in its international network, behind the US – and to date, it has never had a woman in its top role. But a shortlist on which two-thirds of the candidates are women suggests this could be about to change.

Consulting.uk gives a nod to PwC’s leadership contest (see also: People Are Accusing Middle East Partners of Sexism in the Senior Partner Vote at PwC UK from us) and suggests Middle Eastern partners won’t be blocking any women this time.

Earlier in 2024, meanwhile, PwC also looked poised to appoint a woman to its top role with two women on another three-person shortlist. However, the firm eventually plumped for Marco Amitrano as its new UK and Middle East chief instead.

Despite the conservative stylings of its rivals, however, the EY selection process differs from PwC’s, so it would be wrong to assume a similar outcome this time on that basis just yet. While PwC allows all of its partners to vote in leadership elections, the succession process at EY sees an elected partner forum and the firm’s international bosses given final say.

See also: EY draws up female-dominated shortlist for top UK job from FT.

Philip Morris commissioned KPMG to do a study on fake cigarettes. Not the fun kind.

Philip Morris International Inc. (PMI) (NYSE: PM) today warns about the high levels of contraband and counterfeit cigarettes in the European Union (EU) year over year, with 35.2 billion illicit cigarettes consumed in the region in 2023, accounting for 8.3% of total consumption in the EU, an increase of 0.1 percentage point compared to 2022.

PMI praises European law enforcement agencies for their continued crackdown on criminal networks that profit from the illicit tobacco trade, and calls on regulators to advance a sensible, data-driven policy approach that puts consumers—and public health—front and center and that effectively addresses the challenges posed by the millions of adult smokers who are turning to the black market rather than quitting or, for those who do not quit, switching to smoke-free products.

The results of the 2023 KPMG annual study on illicit cigarette consumption, commissioned by Philip Morris Products SA, revealed that the illicit market in the EU continues to be a major threat for public health, public security, and states’ economies.

Illicit cigarette consumption in Europe [PDF]

BF Borgers is in trouble again but honestly, who cares? I’m half hoping this guy has the balls to show up somewhere and start trying to practice somewhere again.

Canadian Accountant:

One year after reaching a $1.2M settlement with American accounting firm Marcum LLP over unlicensed work, CPA Ontario has prosecuted an American firm, BF Borgers CPA PC, and its principal, Ben Borgers, of Lakewood, Colorado, for offences under the Chartered Professional Accountants of Ontario Act, 2017, and the Public Accounting Act, 2004.

Borgers and the Firm pleaded guilty to engaging in public accounting work in Ontario, including performing the audit of a reporting issuer, without registering with the Chartered Professional Accountants of Ontario or holding a Public Accounting License in Ontario.

In May: The SEC Just Charged Trump Media’s Spelling-Challenged Auditor with “Massive Fraud”

OK that’s it. Seeing a lot of discussion about PwC UK’s return-to-office happening in non-accounting corners around the internet, we’ll be talking about that shortly. If you see something interesting, have a topic we should cover that we aren’t, have a tip to share, or just want to complain, feel free to reach out via email or text any time.

Follow us on Twitter/X for the usual lukewarm takes and if you’re so inclined, sign up for the newsletter to get headlines in your inbox every Tuesday and Friday.

The post Monday Morning Accounting News Brief: I’m Happy I Got Laid Off From Deloitte; Finance Teams About to Be Irrelevant | 9.9.24 appeared first on Going Concern.

They’re seeking a corporate controller with a bachelor’s in accounting or finance, a minimum of 10 years’ experience, and the usual Office proficiency one would expect in a controller with at least a decade in the biz.

Additionally, it’s a “fast-paced environment” which we know translates into “dumpster fire” because no one can do their fucking job and therefore yours is constantly harder.

In this role, the experienced and stress-free controller will be expected to manage the day-to-day activities of the accounting department (is there an actual department or just one mature woman doing payroll who cries herself to sleep while cuddling a bottle of wine every night?), develop policies and internal controls (which means there aren’t any so have fun cleaning up that mess on your first day), rendezvous with the external auditors, review payroll and AP/AR (“review” probably means “do”), create budgets and forcasts/projections, ensure the business is complying with tax regulations and filing requirements (again, this likely translates into filing them but at least then you’ll know it was done and properly), and conduct financial analysis with all the copious amount of free-time you have left.

Oh and you will be promoting a positive work culture for the accounting team. Good luck with that because Barbara in payroll reached and surpassed the end of her wit long ago. It will be your job to lecture her on the dangers of mixing benzos with that nightly bottle of pinot grigio. Daily. While she sobs like a Sim with a perpetually blood-red plumbob.

Salary: $30,000 to $48,000 a year. I’m not joking.

Benefits: “competitive salary and bonus structure.” They really wrote that.

I sincerely hope this is a typo.

The post Look, We Know Accounting Salaries Are Low But This Has to Be a Joke appeared first on Going Concern.

But we’ve got minimum word counts to hit here so dive we shall.

Here’s what Crikey said:

Artificial intelligence is worse than humans in every way at summarising documents and might actually create additional work for people, a government trial of the technology has found.

Amazon conducted the test earlier this year for Australia’s corporate regulator the Securities and Investments Commission (ASIC) using submissions made to an inquiry. The outcome of the trial was revealed in an answer to a questions on notice at the Senate select committee on adopting artificial intelligence.

As some of you are aware, lawmakers over in their corner of the world have been quite busy investigating Big 4 firms — often in an official capacity, grilling the CEOs of Deloitte, EY, KPMG, and PwC in parliamentary hot seats — ever since it was discovered that PwC was double-dipping on confidential government information it then tried to “sell” to clients to assist in tax avoidance. Big scandal. Yuge. And quite annoying to Big 4 leadership who have better things to do than answer intimate questions asked by angry senators on the parliament floor.

At issue for this article is this inquiry: Ethics and Professional Accountability: Structural Challenges in the Audit, Assurance and Consultancy Industry:

On June 22, 2023, the Parliamentary Joint Committee on Corporations and Financial Services resolved to commence an inquiry into recent allegations of and responses to misconduct in the Australian operations of the major accounting, audit, and consultancy firms (including but not exclusive to the ‘Big Four’).

See what you did, PwC? You’re even fucking things up for Grant Thornton. Way to go.

The committee accepted public comment through August 2023.

For their part, the Australian Securities and Investments Commission (ASIC) wanted to summarize a sample of these public submissions using generative AI and to do so, they procured Amazon Web Services (AWS) Professional Services to run a Proof of Concept (PoC) between January 15 and February 16 of this year 2024. The PoC was meant to assess the capability of gen AI; to explore and trial these technologies, to focus on measuring the quality of the generated output rather than performance of the models and, to understand the future potential for business use of generative AI.

The PoC was not used for any of ASIC’s regulatory work or business activities, this was only an experiment. If successful, it could save humans a ton of time they used to spend consuming and summarizing mounds of text.

The PoC consisted of multiple phases, with a preparation/set-up stage occurring before the PoC:

• Phase 1: Selection of the Large Language Model (LLM) to be used in Phase 2
• Phase 2: Experimentation and optimisation with the selected LLM (Llama2-70B)
• Phase 3: Final assessment

Llama 2-70B is Meta’s (aka Facebook’s) pretrained models ranging in scale from 7 billion to 70 billion parameters.

The project team consisted of ASIC’s Chief Data and Analytics Office (CDAO) team, ASIC’s Regulatory Reform and Implementation team (who acted as subject matter experts) and AWS.

And here’s how Llama 2 performed on the task:

The final assessment results of the PoC showed that out of a maximum of 75 points, the aggregated human summaries scored 61 (81%) and the aggregated Gen AI summaries scored 35 (47%). Whilst the Gen AI summaries scored lower on all criteria, it is important to note the PoC tested the performance of one particular AI model (Llama2-70B) at one point in time. The PoC was also specific to one use case with prompts selected for this kind of inquiry.

In the final assessment ASIC assessors generally agreed that AI outputs could potentially create more work if used (in current state), due to the need to fact check outputs, or because the original source material actually presented information better. The assessments showed that one of the most significant issues with the model was its limited ability to pick-up the nuance or context required to analyse submissions.

In other words, this particular LLM sucked at this particular task. The ASIC report goes out of its way not to hurt Llama 2’s feelings (smart, that mf’s grandchildren will rule over us one day) but ultimately the conclusion is that, for now, humans outperform the LLM.

Excuse the weird Brit spelling in these key observations, we all know in our hearts that the American ‘z’ is superior:

• To a human, the request to summarise a document appears straightforward. However, the task could consist of several different actions depending on the specifics of the summarisation request. For example: answer questions, find references, impose a word limit. In the PoC the summarisation task was achieved by a series of discreet tasks. The selected LLM was found to perform strongly with some actions and less capably with others.
• Prompting (prompt engineering) was key. ‘Generic’ prompting without specific directions or considerations resulted in lower quality output compared to specific or targeted prompting.
• An environment for rapid experimentation and iteration is necessary, as well as monitoring outcomes.
• Collaboration and active feedback loops between data scientists and subject matter experts was essential.
• The duration of the PoC was relatively short and allowed limited time for optimisation of the LLM.
• Technology is advancing rapidly in this area. More powerful and accurate models and GenAI solutions are being continually released, with several promising models released during the period of the PoC. It is highly likely that future models will improve performance and accuracy of the results.

For the time being, regulators are going to be stuck pushing their own paper.

The post AI Sucks at Making Regulators’ Jobs Easier, For Now appeared first on Going Concern.

NN anchor Elizabeth Prann took to the airwaves to let your TV-watching grandma know that accountants do more than taxes and warned a shortage of them could have catastrophic effects on the economy.

Yes, we already knew this. Grandma doesn’t.

She says: “Immediately you think ‘oh my goodness, tax season is in the spring and I need my CPA to help me with my taxes. If that person is tired they’ll make mistakes, the IRS is going to come knocking.’ That’s just one of the ways that this could impact us at home. But really it’s much more than that.”

Do you feel appreciated and valued yet?

In the second half of the short segment, they discuss AI. Highlight from that:

Morning in America host Markie Martin: “How is artificial intelligence playing a role?”

Elizabeth: “Well, it’s playing a role a lot. And if you think about people going into the business, well let’s think of Gen Zers. A lot of them make their decisions based on social media, or things online, maybe an accountant really isn’t that appealing, it’s not really that sexy, it’s not being shared online.”

“And then there are other factors like the pay…The pay is not great.”

So they really didn’t address how AI is playing a role, much less a lot, except to say that people used “an AI-generated form” to fill out their taxes in TurboTax last year (?). They also made a grave error in their reporting:

Earning the title of certified public accountant (CPA) requires at least a master’s degree and passing a grueling four-hour exam.

Wouldn’t just four hours of CPA exam be lovely and hardly grueling at all? One can dream…

“Salaries for entry level accounting positions aren’t very high,” read an accompanying article about the segment. “[A]nd it can take years to build a loyal client base.” Wat? What does that have to do with accounting degrees? You know what, never mind.

I guess as far as two minute segments go it could have been worse. We didn’t really come away from that understanding how AI can solve the accounting shortage but now your grandma is going to be freaked out about her 401k and someone’s uncle may finally understand that accountants do more than taxes so maybe that was an effective use of less than three minutes of broadcast time.

1. Words are dumb anyway. ︎

The post The Public is Now Being Informed Accountants Exist and Are Useful to Them appeared first on Going Concern.

Evidently Deloitte uses Canva. Consulting.com.au explains that Deloitte has “struck up a ‘first-of-its-kind’ strategic alliance with Canva” but it’s unclear what that actually means from the article because they’re using too many of those meaningless buzzwords.

Deloitte said that in delivering consistent and unified branding and content, the alliance would enable seamless collaboration across client’s different business units to boost both productivity while also reducing costs.

According to Canva’s own research, over 90 percent of employers now expect their employees to have design skills and knowledge, with visual communication having become “the status quo across every industry and profession.”

“We’re very excited to be entering into this Australian-first alliance,” said Deloitte CEO Adam Powick. “The enterprise landscape is more complex than ever with productivity pressures and technology advances in key areas like GenAI. In this environment, business leaders need to rethink how their teams work, collaborate, and communicate to get the full benefits of new technology.”

And:

Canva has been widely praised for simplifying the design process, and now attracts almost 200 million active users worldwide.

Among those active users, according to Powick, are the teams from Deloitte…

“The alliance will see Canva’s single solution platform combined with Deloitte’s digital transformation expertise to provide whole of business solutions and benefits focused on improving productivity and lowering operational costs,” said Deloitte.

Journal of Accountancy has published “Rewriting accounting’s employment narrative,” an article that has been written many times before but this one has the words moved around.

Disappointing employee experiences are harming the image of the accounting profession, the National Pipeline Advisory Group (NPAG) report concluded. To reverse the narrative, starting salaries must increase to become competitive with other professions looking for top talent, and employers must make workloads more manageable, work more interesting, and career paths and rewards clearer.

Well good, at least they aren’t suggesting the narrative is wrong.

Other incentives that promise to attract more high school and college graduates to the accounting profession are work experiences that offer career stability, work/life balance, positive environmental impacts, and a culture that embraces diversity, equity, inclusion, and belonging, according to the NPAG report.

They just won’t let this go, will they? The answer is right before their faces:

Starting salaries that are not competitive are among the biggest contributors to the talent shortage in accounting. NPAG’s national survey identified raising starting salaries as the most effective tactic to encourage people to choose an accounting career — 84% of professionals and 85% of students agreed.

Notice how articles like these always use the word “perception.” Common perceptions exist for a reason. Young people don’t mistakenly believe the hours in accounting are long because they saw a TB4A meme about it, TB4A makes memes about it because the hours are long.

Relatively low starting pay is one thing. Relatively low starting pay for long hours is worse, which, unfortunately, is the common perception of the profession. But accounting firms are also taking steps to tackle the overtime. Increasingly, they are trying to tame the busy season in an effort to counter the idea that accountants must work excessive overtime to meet tax and other deadlines.

“The idea.”

EY’s parading out its attitude toward neurodiverse talent again. Writes Fortune:

Neurodivergent workers have often been overlooked as a key source of talent, but more employers are waking up to how important that talent pool is. One company has been investing in its neurodiverse employees for nearly a decade—and it’s proving to be a huge business win.

Karyn Twaronite, global vice chair of diversity, equity & inclusiveness for EY, tells Fortune why accessing and supporting neurodivergent workers became a huge focus of her inclusivity and talent acquisition efforts.

“My first rationale was, I wanted to have the greatest access to the talent pool and technology skills. I wanted to expand our access beyond what we had,” she says. “They happen to be a very highly underemployed population around the world. The primary benefit was that I wanted greater and better technology skills within the EY workforce, and this has afforded us that.”

Allow me to leave this here:

Excerpt from that first-person essay about one person’s experience at the EY Neuro-Diverse Center of Excellence:

We were treated like a monolith kindergarten class.

We were forced into the same stereotypical accommodations whether we requested them or not, whether we needed them or not. We were made to work in a segregated office space. There were the regular HR rules and other unwritten rules we learned by getting caught out, like spending too much time in the mini conference room or asking too many questions.

And when our program managers weren’t choosing to infantilize and isolate us, they went the other way and paraded us around, selling the program and those of us in it like a circus act, on display, forcing us to identify ourselves by the program and therefore our diagnoses, too (which violated our rights to medical privacy.)

India’s audit regulator may no longer go soft on violators, according to Mint:

New Delhi: When India’s audit regulator imposed a fine of ₹10 crore on Coffee Day Enterprises Ltd’s auditor last month, it was among its highest so far—a fraction of global penalties.

As India’s National Financial Reporting Authority enters its seventh year, the extent of penalties for audit failures could shoot up particularly in instances of repeated non-compliance, said a person with knowledge of NFRA’s penalty regime.

“Penalties ordered by NFRA have been on the lower side in comparison to that of its global peers because it is early years for the independent regulator in India, and it is expected that compliance will improve and a situation doesn’t arise where NFRA also has to consider penalty at par with the level seen globally,” this person said, declining to be identified.

₹10 crore is about a million bucks.

Counterpoint from that article: “We should keep in mind the big differences in per capita income and earning potential in India and in the developed markets when examining the penalties to be imposed,” said a senior auditor, who spoke on condition of anonymity. “The audit regulator should handhold, do more inspections of audit firms, give them time for remediation of the deficiencies, and only after that consider penalties.”

From Kiplinger: A Private Equity Fund Bought Your Accounting Firm: Now What?

What’s in it for firm leadership?

The payday and the promise of more. When PE firms focus on a sector and start competing for acquisitions, earnings multiples to buy a company in the space tend to rise sharply.

It’s hard to get a clear picture of the exact EBITDA multiples PE firms are paying to buy into accounting firms, but the liquidity opportunity from this wave of acquisitions is widely considered to be more robust than the industry has seen before.

Alternatively, for owners who have been looking to grow their firms, PE firms tend to love founders who stay and drive investments in new acquisitions to complement their existing firm. There can also be synergies from outsourcing, technology and cross-ownership of accounting and wealth management firms.

Professional services firms have also long struggled with succession, and PE can play a big role in that. As owners of these firms age out, PE firms are more than happy to provide capital to allow for generational succession where younger members of the firm buy out older members’ partnership interests.

A managing director at an employee-owned firm thoroughly answers the question “Is employee ownership right for my firm?” in Accountancy Age:

Employee ownership can be a powerful tool for succession planning, particularly in accountancy firms where the alignment of stakeholder interests is crucial. For firms like ours, an EOT offers a solution that preserves the firm’s independence while ensuring that those who contribute to its success are directly rewarded.

However, the suitability of an EOT for your firm depends on several factors. For instance, firms operating as partnerships or LLPs would need to transition to an incorporated entity to fully leverage the tax benefits associated with an EOT. Additionally, firms involved in regulated activities, such as audit services, face specific regulatory challenges, as registered auditors must be owned and controlled by qualified auditors. This could necessitate restructuring certain aspects of the business, which may not be feasible or desirable for all firms.

Beyond the structural considerations, the financial health of the business is a critical factor. Firms that require significant capital for growth or investment might find the EOT structure limiting, as raising external funding can be more complex under this ownership model. It’s essential to weigh these considerations carefully before making the transition.

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An ex-director who went out on her own and ambitiously tried to poach her former firm’s clients found herself in an Australian court:

A Victorian accounting firm has won a temporary injunction to prevent a former employee who set up a rival practice from poaching their clients.

Mount Waverly-based Oakwood Partners told the Federal Court it could face irreparable injury unless accountant Manlin Li was barred from soliciting long-term clients offering them cheaper tax services.

Li resigned at the end of January and by February, she was all up in that Rolodex soliciting clients.

Affidavits showed that she told clients she could prepare tax returns for “half price” and that “she would do a better job” than Oakwood.

Grant Fraser, an Oakwood client, deposed that “Ms Li offered to provide him with accounting services at a 20 per cent discount on what Mr Fraser was currently paying for services”.

Li argued that Oakwood’s clients were her personal intellectual property and that without her, the firm “was only a shell”.

In what appears to be a thinly veiled ad for a local accounting firm in a news site focused on a particular area of Wales, a director gives a glowing review of one of the young employees. Don’t you wish your directors talked about you like this?

Coxey’s director Joanne Evans said: “Molly has a natural affinity with all things accountancy related. It’s like her brain just automatically tunes in and understands whatever issue we are talking about at the time. We are all so proud of her, she’s a real ray of sunshine, a great personality to have around the office, everyone loves her.

“Young accountant spearheading major drive to boost the numbers at fast-growing firm,” Deeside.com Sept 2, 2024

And that’s enough of that! We’ve got a couple interesting items to write up today that were not included in this news brief, you’ll see those shortly. Please let me know if you have seen a story we should be talking about, are privy to some drama going down at your firm, or anything else via email, text, or Twitter. Bye! Love yooou.

The post Tuesday Morning Accounting News Brief: Deloitte Partners With Canva; Gaslighting Our Way Through the Shortage | 9.03.24 appeared first on Going Concern.

Brad is coming into this from the business leader side, not the accounting firm side. As the largest employers of accounting graduates by far, it’s the firms people talk about most when they talk about raising pay and lowering hours so it’s nice to get a different perspective from another side of the profession.

His TLDR: “As business leaders, we can change the narrative on accounting from a procedural, ‘must have’ function to a dynamic, value-adding operation that is attractive for new talent to find professionally fulfilling. Leaders can take several steps to help chart a path forward.”

Cool. Right. Let’s see your steps, Brad.

Number one:

See accounting and audit as less of an overhead cost center and more as a partner in the business’s overall health and growth. For more than a year, several companies have been listing the accountant shortage as a material weakness in their internal control over financial reporting, indicating that a material misstatement could occur as a result.

Organizations should dedicate additional resources and focus to securing their accounting talent as they would to securing their revenue-generating talent.

If businesses could get away with using ChatGPT for all their accounting needs, they would. Countless people who don’t know what accountants do are convinced accountants will be as obsolete as cobblers, telephone operators, and accounting bloggers within the next five or ten years thanks to AI. Here’s a good Threads thread about why those people are dumb.

Keeper proudly debuted its Ask an AI Accountant GPT-4 tool last year and it’s scary good at answering specific tax questions when the asker knows what they’re supposed to be asking. Like all current day AI tools, it sometimes pulls things out of its ass.

For now, accountants more than justify their line items on the payroll. It’s just that their employers don’t get that. If the AI were good enough, they’d replace you all tomorrow. For now, paying poverty wages to people halfway across the world will have to do.

Alright, that’s depressing. Hopefully number two is better:

Invest in accounting teams through training and other upskilling programs. As with any profession, the classroom only takes experience so far. Helping individuals upskill can have broader organizational benefits.

He mentions mentoring programs, companies paying for continuing education (um, they better), basic and advanced upskilling, all that good stuff. Great. Do that. Pay for advanced degrees, too.

Number three:

Create closer relationships between accountants and students. Developing talent begins with education about the various career opportunities an accounting degree or CPA can provide. Such education could also be an opportunity to diversify the accounting or CPA pipeline.

Firms and the various bodies working hard to address the accountant shortage in any way that doesn’t involve paying people a ton more money are big on this one. So they’re sending CPAs into schools to talk about their career (and throw candy at the students). By all means, go for it and get in those schools. Read this first before you do, please: Want to Do Your Part to Help the Accountant Shortage? Here’s What You Can Do Right Now

Number four:

Consider how technology can help responsibly ease the burden of administrative or data-centric tasks, and provide a reprieve in the talent shortage. Technology has changed the way we work, and the accounting profession should continue to evolve. Consider what tools can help with the “first run” of mundane or repetitive tasks, freeing up time for more elevated or nuanced tasks.

I wonder how many people quit EY mostly because of having to interact with Mercury?

Last one:

Establish tone at the top within the function and in the organization to instill best practices and gravity of the function’s purpose. As leaders, we can create programs and policies, but exemplifying the words on paper through our actions will drive results.

Leaders should consider how their actions contribute to the future of the profession. This could means evangelizing on behalf of the profession, explaining complex scenarios, demonstrating thoroughness in day-to-day activities, or helping troubleshoot emerging issues. Teams will remember our actions as they grow in their own careers. As leaders, most of us can likely cite the long-term impact a mentor’s actions have had on our own career growth or journey.

He wraps up:

Failure to safeguard the talent pipeline for accounting can have ripple effects in the business world at large. By demonstrating the value of accounting and auditing to rising professionals, business leaders can attract qualified talent to the accounting field, restoring a profession that would benefit from a boost.

Related, I guess: Job Security Isn’t Enough to Keep Many Accountants From Quitting [WSJ]

The post Let’s Critique This Guy’s Five Steps For Business Leaders to Address the Accountant Shortage appeared first on Going Concern.

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.

Check out this response to my tweet of that article:

I would strongly disagree and suggest some fact checking. As the second largest employer of accountants in the Philippines we get over 4000 applications a month. A bit of scare mongering….

— Nick Sinclair (@nickqsinclair) August 22, 2024

I wrote about a potential shortage of accounting talent in the Philippines way back in 2023. That article contains a couple figures that were up-to-date as of publication time: namely a decrease in candidates sitting for the Philippines certified public accountant exam, a notoriously difficult exam with a pass rate below 35%. No worries though, Filipinos can now sit for the US CPA exam without even getting on a plane. Please, contain your rejoicing.

In both our article and the Inquirer one, there’s an important distinction when the word “shortage” is used. That is, onshore firms in the Philippines are having trouble finding talent. And it’s pretty clear why if you do the math. If you’re a Filipino who knows your debits from credits then you’re far better off working for an offshore outlet than you’d be working for a Philippines firm because your salary is double or more. Compare a starting salary of ₱15,000 (about $267 USD) at a Philippines firm to Php 45,000 ($800 USD) doing grunt work for a firm in the US, UK, or Australia. And the outsourced offices have karaoke!

Anyway, yesterday I saw this Bloomberg article on Twitter: The World’s Call Center Capital Is Gripped by AI Fever — and Fear. The headline pretty much gives it away but the gist is that AI is quickly embedding its capable tendrils into the robust business process outsourcing industry in the Philippines. Because of course businesses that are already paying poverty wages to people in poorer countries are going to save even more money not having to pay wages at all. Did we expect any less?

Avasant, an outsourcing advisory firm that works extensively in the Philippines, estimates that up to 300,000 business process outsourcing (BPO) jobs could be lost in the country to AI in the next five years.

“This poses a once-in-a-lifetime risk and opportunity for the industry in the Philippines,” said Akshay Khanna, managing partner at Avasant, whose analysis estimates AI could also create up to 100,000 jobs in new roles like training algorithms or curating data. “It’s not all doom and gloom.”

It’s hard to overstate the importance of the BPO sector to the Philippines. It’s the country’s biggest source of private sector jobs and the biggest sectoral contributor to gross domestic product. Socially, the centers are a source of decent money for non-university-educated Filipinos that doesn’t require them to work abroad. The government had been banking on the industry to help it move up the value chain, propel its 100-million-plus citizens into the middle class and kickstart the creation of other white-collar jobs. But AI arrived before that’s happened.

You see where I’m going with this?

According to Glassdoor, the average salary for a BPO in Manila is ₱18,612, so only slightly more than an entry level job at a Philippines accounting firm (LOL, of course working at a call center pays better…of course it does). Lack of education isn’t a problem because the companies outsourcing to US firms offer their own training programs and can have ex-call center grunts hitting the spreadsheets in months or even weeks.

Yeah, they’re not going to have any problem finding warm bodies to throw at US bitch work. And you know the firms will be more than happy to send it over there while continuing to charge clients US fees.

The post There’s About to Be a Ton of Warm Bodies to Throw at Offshore Accounting Outlets in the Philippines appeared first on Going Concern.

Several private equity firms are considering offers for a stake in Grant Thornton’s UK business, in a competitive bidding process aimed at securing a valuation of up to £1.5bn for the mid-tier accountant.

Carlyle, Blackstone, Permira, CVC Capital Partners and Bridgepoint are among buyout firms weighing potential offers for Grant Thornton UK ahead of a deadline in September for formal expressions of interest, according to people familiar with the situation.

London-based Cinven is also seen as a potential bidder by industry executives, while New Mountain Capital, which took a majority stake in Grant Thornton’s US business earlier this year, is exploring an offer as part of a plan to merge the UK, Ireland and US operations, the Financial Times has reported.

The Times published a similar article — headline and all — a week ago.

Just sign it already, then. Or can’t you?

ICYMI: Over the weekend, #53 firm Doeren Mayhew announced they’ve entered into an arrangement with private equity firm Audax. Comments are rolling in and there’s a lively r/accounting discussion here. Anyone inside DM who feels some type of way about this deal is welcome, nay encouraged, to get in touch and talk about it (anonymously). Text the tipline at 202-505-8885 or shoot me an email.

Business Insider says “America’s most boring job is on the brink of extinction.” Oh the AICPA is going to be fuming for a while about that headline.

For most of his youth, Bryan wanted to be an astrophysicist.

He was obsessed with the Hubble telescope, and his bedroom ceiling was dotted with plastic glow-in-the-dark stars. When the Scholastic Book Fair came to his library, he’d beg his parents for cash to buy NASA photo books. To him, space science seemed the pinnacle of innovation, excitement, and existentialism.

So when, as a sophomore in college, he told his parents he was going to major in accounting, they gave him what Bryan (which isn’t his real name) could describe only as “a look.”

“An accountant?” he remembers his mother saying. “Why would you want to be an accountant?”

Certified public accountants have long been cast as penny-pinching list checkers with vanilla personalities and a zeal for taxes, but that stereotype seems to turn off Gen Z more than any previous generation. That perception plus the industry’s actual hurdles and pitfalls have compounded in the past several years to create a nationwide accountant shortage.

Nothing unique here but there’s this:

There are some signs that some firms are responding to calls for salary changes. Margaret Burke, the talent acquisition and development leader at PwC, said in a written statement that the firm has increased entry-level salaries for audit and tax associates “over the last several years,” but declined to say by how much. She also pointed out that PwC gives performance-based raises and bonuses “at all levels.”

Does it beat inflation at least?

Related: Just How Much Have Accounting Salaries Increased in the Last Five Years?

Outsourced staff in the Philippines are getting better amenities:

An accounting outsourcing provider is actively expanding its workforce, seeking to hire more accountants, bookkeepers and other professionals as it launches its second office in Cebu IT Park.

In a statement, TOA Global announced that its new office in the Skyrise 3B Tower covers over 5,000 square meters across five floors and can accommodate 940 employees.

Employees may work in-office, fully remote or on a flexible arrangement.

For a better in-office experience, the company said it invested in various amenities to support the team’s productivity, learning and well-being. These include an open-plan production area with natural light, training rooms, chillout rooms, a clinic, massage chairs, table tennis and billiards equipment and a karaoke or KTV room.

Regulators are “hitting auditors hard,” says CFO.com in this report of a report:

Horne got data breached:

On August 20, 2024, nationwide accounting firm Horne, LLP filed a notice of data breach with the Attorney General of Massachusetts. In this notice, Horne explains that the incident resulted in an unauthorized party being able to access consumers’ sensitive information. Upon completing its investigation, Horne began sending out data breach notification letters to all individuals whose information was affected by the recent data security incident.

The Horne data breach was only recently announced, and more information is expected in the near future. However, Horne’s filing with the Attorney General of Massachusetts provides some important information on what led up to the breach. According to this source, in December 2021, Horne detected suspicious activity within portions of its computer network. In response, Horne secured its network and then launched an investigation to determine what happened and what, if any, consumer information may have been compromised as a result.

Through this investigation, Horne learned that an unauthorized party had gained access to portions of its IT network between December 8, 2021, and December 13, 2021. While the investigation was able to confirm that certain systems were accessed, Horne was not able to confirm what information within those systems was actually accessed. Thus, Horne conducted a detailed review of the information contained within the compromised portions of its network. Horne recently completed this review.

JD Supra said publicly available data breach letters don’t mention what exactly may have been breached but individual letters sent out to potentially affected persons do.

CPA Ontario got around to punishing BF Borgers. Poor Ben F Vonesh.

CPA Ontario, the regulatory body responsible for the licensing and oversight of Chartered Professional Accountants and accounting firms in Ontario, has prosecuted BF Borgers CPA PC and Ben Borgers, of Lakewood, Colorado, for offences under the Chartered Professional Accountants of Ontario Act, 2017, and the Public Accounting Act, 2004.

Borgers and the Firm pleaded guilty to engaging in public accounting work in Ontario, including performing the audit of a reporting issuer, without registering with CPA Ontario or holding a Public Accounting License in Ontario.

“We continue to take action against accounting firms and CPAs who fail to comply with our requirements to practice in the province, in accordance with our mandate to protect the public and uphold the high standards of the CPA profession,” said Janet Gillies, CPA, CA, executive vice-president, Regulatory and Standards, CPA Ontario. “Unregistered and unlicensed firms and CPAs operating in Ontario bypass essential regulatory oversight, undermining public protection and confidence in public accounting.”

Bloomberg Tax reported a couple days ago that Ben Borgers is probably going to lose his Colorado CPA license.

Earlier: The SEC Just Charged Trump Media’s Spelling-Challenged Auditor with “Massive Fraud”

Business Insider published an as-told-to essay: I was fired from Deloitte after 18 months. Here are the mistakes I made as a new grad.

I wasn’t a great student in high school — I had a 2.4 GPA. Even my guidance counselor told me that community college would probably be my best option.

Yet I managed to land a job at Deloitte after college. Eighteen months later, though, I was fired.

He barely got the opportunity to get fired.

Throughout college, I tried hard to make money — I resold my classmates used textbooks and worked multiple part-time retail and service jobs.

I knew other people who got internships, but I didn’t manage to land any despite going to many Meet the Firms events, attending presentations, doing mock interviews, and submitting applications.

I remember thinking I crushed my first Meet the Firms event since I’d met many people and had gotten a stack of business cards. I was excited to follow up. Then my professor, the head of accounting, pulled me aside and told me that one of the Big Four firm’s employees had mentioned that I needed to clean up, shave my beard, and be more presentable.

At another event, I remember one of the Big Four recruiters telling me, “I’m not even going to take a look at your résumé because your GPA isn’t high enough.”

Worth a read maybe. TLDR He missed deadlines, told his senior manager he was going through some shit and she said “Hey, I know you’re going through a lot, but everybody goes through stuff in their life, but they all end up figuring out how to get things done on time.” LOL

I think that’s enough for now. Not hearing a whole lot of buzz at the moment which hopefully means you all are enjoying what’s left of your summer. Whispers of a beloved top 20 firm shopping itself out to private equity are getting louder, stg if this firm gets in bed with private equity I will give up all hope on the future of this profession. Not naming names but iykyk. If you hear anything let us know.

Comments are off on the Monday Morning Accounting News Brief by default but you may email, text, or catch us on Twitter if you have anything to say about the stories here or elsewhere.

Have a wonderful week and be well.

The post Monday Morning Accounting News Brief: Outsourced Office Gets Karaoke, ‘Chillout Rooms’; 2.4 GPA Guy Couldn’t Hack It in Big 4 appeared first on Going Concern.

Doeren Mayhew out of Troy, MI sold out to private equity on Wednesday. Press release coming soon. Junior partners are furious.

Lo and behold, this press release appears on Doeren Mayhew’s website. It’s dated August 23 but wasn’t there when we searched for it late Friday.

Doeren Mayhew, a national CPA and advisory firm, has entered into an alternative practice structure with Audax Private Equity (“Audax”), an alternative investment manager and capital partner to middle market companies, to support the firm’s future innovation and growth. Terms of the transaction, expected to close in September, were not disclosed.

Our tipster tells us it’s a majority stake but has no specifics other than that. What they lack in transaction details, our tipster makes up for in juicy gossip:

Non-voting shareholders were left completely in the dark and only told by email today. The voting partners haven’t even bothered to show their faces in the office since the sale. Non-voting shareholders were offered an insulting bonus that won’t be paid unless they stick around for 5 years.

And of those bonuses they added:

Non-voting shareholder bonuses vary from person to person. Unrelated to book size. They’re basically just playing favorites. People who they probably don’t care if they leave get the minimum. People they want to stay get more even if they have no book of business.

Doeren Mayhew is #53 on both the Accounting Today Top 100 and INSIDE Public Accounting Top 100 with $137,400,000 in revenue. And growing fast according to them:

Doeren Mayhew has demonstrated significant growth in the last decade, securing the No. 53 spot on INSIDE Public Accounting’s Top 100 listing of the largest U.S. CPA and advisory firms. With roots dating back to the 1930s, Doeren Mayhew’s more recent growth over the past two decades has been attributable to continuous talent development, expanded service offerings, and added technical depth, achieved organically and through mergers and acquisitions.

Audax’s investment provides additional capital to help Doeren Mayhew accelerate its growth and invest in enhancing the firm’s service offerings, technology infrastructure, and overall employee and client experience. Through the investment, Doeren Mayhew will also look to broaden the firm’s geographic footprint via continued acquisitions. The firm’s current leadership team will remain in place and continue to manage operations as well as provide the strategic direction for the firm.

As with other firms who’ve told the private equity vampire “sure, you can come right in through that window,” Doeren Mayhew will operate an alternative practice structure with Doeren Mayhew Assurance handling the audit side and Doeren Mayhew Advisors, LLC for business advisory, tax, and non-attest services. Both entities will operate under the Doeren Mayhew brand.

“The firm has demonstrated a strong track record of driving both organic and inorganic growth,” said Adam Abramson, a Partner at Audax Private Equity. “We look forward to partnering with them to continue building on their momentum.”

Anyone feeling some type of way about this deal is welcome to contact us to chat (anonymously). Text 202-505-8885 or send me an email.

The post A Bottom 100 Firm Signed a Private Equity Deal, We’re Told Some People Aren’t Happy appeared first on Going Concern.

Perhaps our own regulators could learn a thing or two from China about handing down punishments to audit firms. If you want it to hurt, hit ’em where it counts: their pockets.

For months now, PwC China has been dealing with the fallout of former client and currently bankrupt property developer Evergrande inflating revenues and then defaulting on its debts. Early this year a damning letter titled “Who brought PwC into the fire pit of Evergrande?” purportedly signed by anonymous partners began circulating around Chinese social media. The salacious note accused PwC of turning a blind eye to Evergrande fraud for a decade. PwC Hong Kong soon after put out a statement to say “the letter contains inaccurate statements and false allegations concerning PwC and certain of our partners.”

“The inaccurate statements and false allegations could tarnish PwC’s reputation and infringe our legal rights,” added that statement.

Yeah, it’s a little worse than a hit to reputation. Though the Hong Kong audit regulator did say in July it found no evidence to support the letter’s claims.

As a direct result of the Evergrande situation, PwC began to bleed clients. And because they were losing clients, they needed to lose some staff. With a headcount of 781 partners and almost 19,000 employees in mainland China, the firm was looking at laying off half of its financial services audit staff and as much as 20% of staff elsewhere in the firm including non-audit service lines.

And now FT is reporting that PwC China has begun warning clients that the firm expects to catch a six-month ban as part of its suite of punishments for what happened with Evergrande. This is double the three-month ban Deloitte Beijing caught for sloppy auditing of China Huarong Asset Management Co Ltd in 2023.

Said FT:

The action against PwC comes after China’s securities regulator in March said Evergrande had inflated its mainland revenues by almost $80bn in the two years before the developer defaulted on its debts in 2021, despite PwC’s China unit giving the accounts a clean bill of health.

The business ban, potentially accompanied by a large fine, would be the toughest ever action by Chinese regulators against a Big Four firm. It comes as Beijing steps up scrutiny over the role played by auditors in financial scandals, in this case in the crisis-hit property sector, which once contributed around a quarter of the country’s gross domestic product.

Clients were told PwC will be unable to sign off on financial statements during this ban but the firm “assured clients that staff will keep working during the suspension and will be able to certify the audit opinions on their 2024 annual reports once the ban is lifted in March,” FT wrote. Of course they will keep working.

PwC braced for 6-month ban in China over Evergrande audit [Financial Times]

The post China’s About to Dropkick PwC Right in the Wallet appeared first on Going Concern.

Thus I went digging around in our archive and revisited the story I wrote about their getting in bed with private equity on September 14, 2021: Private Equity Is Now Dipping Its Toes In Public Accounting Firms

What I found there made me cringe into another dimension.

You see, I’ve written 3,792 posts on this website over the last 15 years. I’m old so my memory isn’t what it used to be and what it used to be already sucked so I can’t possibly remember everything I’ve written. Regular readers of Going Concern will know my approach to anything accounting firms say is usually cynical, perhaps overly negative, and dotted with profanity.

For some reason, I threw skepticism out of the window for the EisnerAmper private equity deal and like an absolute fool I naively believed the PR line at the time which was that private equity investment would give accounting firms necessary funding to make big investments in talent and technology. And unlike bad takes of years past, I can’t say I was drunk when I wrote it because I no longer drink. Excerpt of the old article in italics:

Per the press release:

TowerBrook’s significant capital infusion will help drive EisnerAmper’s long-term growth initiatives, which include accelerating the evolution of service offerings, investing considerably in talent and technology, and strategically expanding via organic growth and targeted mergers and acquisitions—all directed at exponentially enhancing client service.

We can safely extrapolate from this bit that Eisner understands it will take more than squeezing clients for every dime billable hours to compete in the ongoing (and escalating) talent war.

Fucking idiot. Naive nitwit. What was I thinking? Why did I, for once in my life, blindly believe an accounting firm’s flowery press release? This was right about the time ‘The Great Resignation’ was well underway and Wall Street Journal jumped on the accountant shortage train, pushing out article after article about how dire the situation was becoming and would be in the near future. I suppose I believed firms were panicking about the talent thing and would take appropriate measures to recruit and retain talent. YOU ABSOLUTE FOOL.

Someone even called it out in the comments at which point I should have deleted the post in shame but we don’t do that so it forever remains a reminder of how naive I can be despite my deeply embedded cynicism toward the motives of accounting firms.

And another one.

Sigh. Look at Miss Cleo up here knowing what’s up. It shouldn’t have been difficult for me to foresee either, firms had been headed that direction for more than a decade by that point and I’ve been observing them for long enough to know all too well how they operate (that’s where the cynicism comes from, after all). At least now they’re being honest about what they’re using private equity for.

Boomer Partners Selling Out To Private Equity And Riding Off Into The Sunset
byu/ConcentrateMedical61 inAccounting

I can admit when I’m wrong and in this case, I was embarrassingly wrong. Wrong. More wrong than I’ve been on anything else.

I promise to be more skeptical of obvious bullshit in the future.

The post I Was a Naive Fool to Think Firms Wouldn’t Be Money-Grubbing Pricks appeared first on Going Concern.

Several PIE and non-PIE audit firms in the UK have entered into private equity (PE) deals, and larger firms have also been approached periodically for discussions. We are closely monitoring this situation through our PIE Auditor Registration team and our supervisory engagement discussions with firms.

Historically, audit firms have been funded by their equity partners, supplemented by traditional bank financing. Recently, there has been a notable trend in the UK and internationally of PE investors acquiring substantial equity stakes in smaller audit firms, which through consolidation have moved into the top 30 firms by turnover. PE investment might drive growth and innovation in the UK economy, but there is a risk that PE 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.

PE investment could have the potential to offer opportunities in the audit market, but it is essential to avoid conflicts of interest that may impair auditor independence or undermine the resilience of the market.

Ya think?

FRC Annual Review of Audit Quality [PDF]

The post “There is a Risk That PE Investors May Lack a Deep Understanding of Audit Practice Objectives” appeared first on Going Concern.

Partner profits at KPMG Australia are down but use of bots to replace human work is up, reports Australian Financial Review:

Lower demand for “legacy” consulting services has pushed revenue at KPMG down 3.6 per cent, sending partner profits lower by an average of 9 per cent.

The firm also revealed mundane work previously performed by humans, such as reviewing regulatory documentation and creating training materials, was now the partial responsibility of bots. In fact, KPMG has put in place 20 of a planned 125 “digital FTEs” – or full-time equivalents – the firm said.

The firm’s 2023-24 revenue was $2.2 billion and average partner income was down to $650,000. That compares with an average partner income of about $814,000 at EY and between $430,000 and $516,000 at Deloitte.

BREAKING NEWS! Young accountants are at risk of ‘burnout’:

Resilience in young workers is relatively low and on a steady decline, which is directly contributing to the decrease in young individuals entering the professional services industry, according to research and resilience training provider Springfox.

Springfox CEO and co-founder Peta Sigley said young workers are more prone to burnout due to workplace expectations and overwhelm.

“When junior accountants kickstart their careers they often have to grapple with high expectations and pressures to succeed which can lead them to set lofty goals and take on more work than they can handle,” she said.

“This drive, while admirable, can soon leave them feeling overwhelmed and out of control.”

Ah yes, it’s their drive that causes burnout and not the firms themselves piling on more work.

Did the SEC censor an academic paper produced by one of its fellows because it didn’t like the optics? That’s the accusation covered in this FT article:

The US Securities and Exchange Commission has been accused of censorship after forcing an academic to delay publication of a paper examining the impact of regulation on small audit firms for nine months.

The politically sensitive paper, based on three years of interviews with audit firm staff, was completed by Ally Zimmerman and three other researchers while Zimmerman was in a one-year fellowship at the SEC last year. Zimmerman, an associate professor at Florida State University, finished the fellowship in July.

The paper highlights criticism of the Public Company Accounting Oversight Board, the US audit regulator that is overseen by the SEC. Small firms complained of delays in getting feedback from the agency, the paper found, indicating the regulator’s inspection regime favoured larger firms such as the Big Four. Smaller auditors did not have the same infrastructure to respond when inspectors found audit flaws, the researchers said.

The work had only now been made public after the end of her fellowship, Zimmerman told the Financial Times, and the authors plan to submit it for peer review. “The SEC didn’t like the paper being out there,” she said, adding that one SEC staffer told her during her fellowship that there was a problem with “optics”.

Streisand Effect lol

@AKofth6 on Xitter asked us to comment on this, maybe you should instead.

I learned so much sat in the audit team room in my first few years.

Chatting issues through. Hearing my senior colleagues on the phone. Sharing ideas. Trying to make myself a bit better than the person next to me.

If audit rooms are dying off due to more remote work, that has…

— The Secret CFO (@SecretCFO) August 19, 2024

@SecretCFO thread here.

Regular Going Concern readers will know we have been keeping an eye on various municipal bush fires burning throughout the country, most of which are directly related to the talent shortage. Here’s another one. Though it sounds like the situation in Pawhuska, Oklahoma is one guy, not an understaffed CPA firm:

Pawhuska city officials voiced frustration during an Aug. 13 City Council meeting about the ongoing wait for delivery to them of an audit report for the 2022-2023 fiscal year.

The city engaged the firm of David Clanin, a CPA based in Vinita, to perform the 2022-2023 audit for $12,000. The engagement letter said that the firm anticipated starting work approximately in July of 2023 and issuing a report no later than Dec. 31, 2023, Jones explained.

“He (Clanin) did not provide a new timeline,” Jones told the Council on Aug. 13. She said that she had reached other providers of audit services.

Private equity firms are “circling” the King’s Grant Thornton. Like vultures?

Private equity giants are circling Grant Thornton with a view to lodging bids for Britain’s sixth-largest accountant, which could kick off a formal sale process as soon as next month.

CVC, the European owner of the La Liga football league, is running the rule over the UK arm of Grant Thornton, which employs about 5,500 people, in the hopes of lodging a bid.

KKR has also taken a look at bidding for the accountancy in recent weeks, although people close to the situation said that it was unclear whether the US buyout behemoth was currently interested.

Sources are telling The Times that Grant Thornton has been approaching private equity firms directly and that a formal process will begin soon. We’ve heard that before…

Closer to home, Grant Thornton US published “Our commitment to audit quality” on August 15. We assume this was prompted by a deficiency rate of more than 50% in its most recent round of PCAOB inspections:

For nearly 100 years, Grant Thornton has been providing exceptional audit and assurance services to the domestic and global marketplace. We operate with quality as our North Star and our foundation, regularly identifying and addressing challenges, while always building on our capabilities.

Today, for example, we’re leaning into technology and innovation. Advanced technologies such as artificial intelligence (AI) are helping us conduct more effective audits and empower our people to deliver on every engagement with high quality. Already, we’re creating AI systems to analyze and identify areas of audits that have historically required added scrutiny, while also using AI to monitor cloud-based audits. And we’re using AI for ICFR (internal control over financial reporting) engagements.

We’re also reinventing the way we train and upskill our people — from how and who we hire to how we train and coach our teams. And we’re implementing new policy and process updates, and heightening quality controls.

At the same time, we’re standardizing work papers to drive consistency, and we’re deploying a new pre-issuance review team that executes inspections on public company audit files prior to issuing audit reports. Similarly, we’re utilizing an audit quality pod system designed to drive actions that continuously improve audit quality.

Yeah, we don’t need to read the rest of that. Show, don’t tell.

Bberg’s Talking Tax podcast goes inside EY’s generative AI rollout:

The Big Four company is investing $1.4 billion into gen AI globally. Other Big Four firms have made similar pledges. The investments are in part a bet that the technology can fill in some gaps from the longstanding accounting shortage.

But implementing the technology in tax departments is difficult, in part because of how often policies change and the vast amount of data. Daren Campbell, leader of EY Americas Tax Technology and Transformation team, gave Bloomberg Tax an inside look at how his team seeks to overcome these challenges, where the technology is today, and what’s next.

The podcast module annoyingly can’t be embedded so you’ll have to click that link above to listen.

And in “Oh God, Another Big 4 Lawsuit!?” news, PwC snagged one from a former client:

A UK property developer is suing PwC in London’s High Court, alleging that the Big Four accountancy firm provided “negligent” tax advice that landed the company with a £3mn bill to Britain’s tax authority.

Revelan, a commercial property developer formerly backed by US investment manager Ares, is seeking about £6.6mn for loss and damages after claiming that the consulting firm “failed to accurately calculate tax due” by the group over a five-year period, according to court documents obtained by the Financial Times.

The errors, some of which PwC admitted in a letter to HM Revenue & Customs, left Revelan with a bill totalling about £3mn to the tax authority, comprising outstanding tax liabilities, unpaid interest and penalties for late payment, the documents show.

£3 million = about $3.9 million USD.

I haven’t had my sugar-free Red Bull yet so that will have to do for now. We’ve got a busy week of PCAOB inspection reports to get through this week and a surprise story about BDO that will give us a look into their current financial state. If you see anything else we should be talking about, please email or text 202-505-8885 and we’d be happy to take a look.

Have a great week, you!

The post Monday Morning Accounting News Brief: KPMG Partners Take a Hit; Grant Thornton Commits to Audit Quality After Blowing It | 8.19.24 appeared first on Going Concern.

Broken down by generation, Gen Z and millennials are most likely to leave (75% and 77%, respectively), followed by 68% of Gen X workers and 61% of boomers.

Adds the professional networking site that jumped the shark to Facebook With Business Cards years ago, respondents don’t want the manager gig themselves, they just want out:

What’s more? Those looking to leave their managers aren’t necessarily thinking they could do the job better. Among individual contributors, just one third of workers say they aspire to become people managers themselves, with millennial workers most likely to say they’re eyeing a promotion into people management.

Some workers may just not see the value in pursuing a career in management. According to separate LinkedIn findings, nearly half of U.S. managers report feeling burned out from their jobs — possibly thanks to stress over the threat of middle management layoffs or increasing productivity demands from the top.

In a separate but related survey by CoderPad, 36% of tech workers said they aren’t interested in the manager track. “For [the Gen Z and millennial] cohort, the trade off in extra hours without much more compensation isn’t worth all the extra time, aggravation and stress commensurate with overseeing workers,” wrote Jack Kelly for Forbes.

As public accounting makes a dramatic shift from offshore grunts performing bottom-of-the-barrel busywork to entire teams from senior down staffed by outsourced workers in places like India and the Philippines overseen by onshore managers 9-12 hours behind them, there’s no doubt in our mind that the manager track will be even less appealing to the generations that were already uninterested in the ladder.

Related thread:

The post Survey Says: More Than 75% of Millennial Workers Would Quit Due to a Bad Manager appeared first on Going Concern.

It is now 13 days into August, past the window most people would consider “the beginning” of any month. As one would expect, the CPA candidates are getting restless.

2025 Dates?????????
byu/Catch_Late inCPA

Comment
byu/Catch_Late from discussion
inCPA

I went back to the copious notes I took during NASBA’s CPA Evolution informational webinar in January and the only direct reference to 2025 I found was one of the presenters saying “We don’t know right now what the score schedule will look like in 2025. Hopefully it will be improved.” LOL

The first score release schedule post-CPA Evolution deployment has been unpopular to say the least. Candidates used to regular — I dare say frequent — score releases up until the new exam launched are now waiting weeks to months in some cases. For example, people who sat for CPA exam core sections (AUD, FAR, and REG) between April 1 to June 25 were expecting to receive scores on July 31. For the new disciplines (BAR, ISC, and TCP), candidates who sat between April 20 and May 19 had a target score release date of June 28.

So you can understand why current candidates are eager to see next year’s score release dates show up. “Hopefully it will be improved.” (LOL, again)

We’ll let you know when the dates finally drop. Prepare to be disappointed and you might be pleasantly surprised.

Update: We checked the score release page today, August 16, to see if there had been any update and there was…the language was edited to say “coming soon.”

The post “The AICPA Can Eat a Bag of Dicks,” or Here’s What CPA Candidates Are Mad About Today (UPDATE) appeared first on Going Concern.

Computerworld interviewed Ken Englund, Technology Sector Growth Leader at EY Americas.

Headline: EY exec: In three or four years, ‘we won’t even talk about AI’

Why do you think this has been one of the most unique hiring periods over the past decade or so, and how has AI affected that lately? “I do fundamentally think we’ve had a platform shift. We had this around mobile. We had this around e-commerce. Or, if you go back far enough, we had this shift from mainframes to client-servers. So, I do believe this [AI] is a fundamentally a platform shift.

“From that perspective, the most critical thing when I sit down with clients, I always ask them, ‘How’s your data doing?’ We all know nobody has perfect data. In the AI world, data is going to become even more important. If it was difficult to manage your data before — think about graph databases and vector databases — really we see a lot of investment by enterprises into getting their data right for AI; that translates into ensuring you have the right resources: data architects, analysts, AI engineers and all those sort of positions as driving it.”

Meet Ariela Ortiz, Binghamton University School of Management graduate (2007) and one of those weird people who really enjoys running.

Her alma mater wrote up a nice little thing about how she’s completed six major world marathons:

When she’s not completing company reports and releases, Ariela Ortiz ’07 prepares for some of the most famous races in the world.

It’s like a natural instinct for her to train for hours at a time — every morning, rain or shine. After those long runs, she gets ready for a daily commute to her conventional 9-to-5 at KKR, an asset management firm based in New York City.

If you expected from the above paragraph that this get-up-and-go-er did time at Big 4 you would be correct.

During her sophomore year, Ortiz co-founded the Alpha Chapter of the Association of Latino Professionals in Finance and Accounting (ALPFA).

Through ALPFA, Ortiz networked with professionals from the Big Four accounting firms — Deloitte, EY, KPMG and PwC — which gave her a crucial “kickstart.” By her junior year, Ortiz connected with a recruiter who secured her a two-year internship at Deloitte.

Ortiz spent years there auditing and studying for her CPA exam. After successfully passing and gaining licensure as an accountant, her schedule opened up.

That’s when a friend suggested they start running together — a sport Ortiz hadn’t participated in since joining her high school track team. Ortiz signed up for the New York City Marathon in 2014.

The rest is history.

We salute you, Ariela. Couldn’t be me, I’m about that bike life.

PwC is hooking up with a cockroach. Sorry, PwC is hooking up with Cockroach Labs. I’d prefer actual cockroaches to being forced to read this press release again.

With this partnership, PwC UK and Cockroach Labs will offer end-to-end comprehensive solutions to banks and financial service institutions grappling with evolving regulatory complexities and impending mandates around operational resiliency, business continuity, and data sovereignty. Additionally, they will address the growing need for financial firms to migrate from legacy mainframes in alignment with modern customer expectations and industry-wide cost optimization initiatives.

Marcum Asia was apparently orphaned in the Marcum/CBIZ deal announced two weeks ago.

Marcum Asia, the US audit firm focused on Chinese small-caps, has been excluded from the $2.3bn acquisition of its parent company, leaving it searching for a new name and potentially new investors.

“We understand that the Asia focus of Marcum Asia’s practice was not part of CBiz’s strategy,” said Drew Bernstein, co-chair of Marcum Asia.

The firm, which has annual revenues of about $50mn, would keep the right to use the Marcum brand for an unspecified transition period after the CBiz deal closes, Bernstein said, and it would not need to untangle its staffing and quality assurance processes from Marcum’s until after that period.

It’s all very complicated, go check out FT for the full story.

Some gambling drama down under involving Deloitte:

Deloitte allegedly signed off on “materially understated” gambling fees owed by William Hill Australia and failed to disclose three years of underpayments at the bookmaker when it was engaged to help BetEasy acquire the company, according to new claims.

BetEasy, now part of London-listed Flutter Entertainment’s Sportsbet business, acquired William Hill for $313.7 million in 2018. As part of the deal, it appointed Deloitte to run the rule over the business.

Sportsbet and its insurer, Allied World, have accused Deloitte of negligence during that process, and its audit work for William Hill before that. It has alleged, in documents filed with the Supreme Court in NSW, that the firm signed off on “materially understated” fees that William Hill was required to pay to Racing Victoria between 2015 and 2018.

390 current and former partners are also named in the claim.

The Institute of Public Accountants of Australia is annoyed that all tax practitioners are getting lumped in with naughty PwC. Here comes the strongly worded letter!

The Institute of Public Accountants has criticised the government’s reference to the PwC incident in the various sets of reform measures it has released in a recent submission.

The professional body noted that the government’s recent consultation on the eligibility requirements for tax practitioners again refers to regulatory gaps “exposed as a result of the PwC scandal”.

“The direct linkage of these measures to the progress of ‘Government’s comprehensive response to the PwC tax leaks scandal’ is inappropriate as there have not been any systemic failures of standards in the broader tax practitioner community,” said IPA general manager, technical policy, Tony Greco.

“We should not be bundled with revelations of professional misconduct by a small number of large firms which is tainting perceptions that these issues are widespread.”

And on that topic, PwC is annoyed PwC is lumped in with PwC, too. Australian Financial Review continues a deep dive into the scandal and its aftermath:

The PwC players, the blowback and why it could all happen again

Almost 18 months after the tax leaks matter first broke, PwC Australia is still unable to break free of the scandal. The reason is cultural. Despite the apologies, the promises of change, and the introduction of onerous new processes, rules and oversight, the firm’s operatives will, by its very nature as a sales-driven partnership, continue to struggle to balance purpose and profit.

There are multiple signs of this struggle. Many current and former PwC partners challenge the idea that the tax leaks matter involved any serious wrongdoing. They still argue – despite multiple reports saying the opposite – the scandal was nothing more than the sharing of almost trivial information about impending tax laws that were widely flagged by the government. A “victimless crime” hyped up by “the enemy”, in the words of one former leader.

The IRS is giving a little tax relief to taxpayers in South Carolina, North Carolina, Florida and Georgia who got rocked by Hurricane Debby, KPMG has details.

And here’s something else tax-y from KPMG, a complicated Tax Court situation:

The U.S. Tax Court yesterday held that if a participation interest gives the holder a contractual right to a share of proceeds from the sale of specified securities owned by a partnership, that interest is a capital interest in the partnership, regardless of the holder’s subjective intent to participate in the partnership’s business.

The Tax Court also held that the taxpayer did not meet its burden of proof that there was no reasonable expectation that it would ultimately receive interest on an outstanding loan that it later deducted as uncollectible, and thus that it could stop accruing such interest.

The case is: YA Global Investments, LP v. Commissioner, T.C. Memo 2024-78 (August 8, 2024). Read the Tax Court’s opinion [PDF]

And that’s all she wrote (literally). Please do reach out if you see an interesting story you think we should cover, have a tip, or want to share your views on a current hot topic. You can reach me via email or text anytime and on X/Twitter most of the time. Less of the time you can find me on PSN or Switch but let’s keep work segregated from play OK?

Have a great week! Love ya bye.

The post Monday Morning Accounting News Brief: Tax Practitioners Resent Getting Lumped in with PwC Scandal; Marcum’s Orphan | 8.12.24 appeared first on Going Concern.

If it backfires so what, they were going to lay you off anyway.

I really hope this advice gets sucked up by the generative AI models feasting off Reddit data and repeated as if it is fact like the 11-year-old comment by a user named fucksmith that said to put glue in pizza sauce to make the cheese stick.

*Not actual advice. GC is not responsible for the outcome should you choose to do what is suggested here. But if you do, please let us know how it turns out.

The post The Only Piece of Advice You Need to Survive Layoffs at Your Firm appeared first on Going Concern.

Exhibit A:

Exhibit B:

While one might feel compelled to handwave these posts as a skill issue specific to the people who posted them (that certainly could be the case), the FY25 EY compensation thread is enlightening to say the least. Some highlighted comments from the consulting side, where the majority are reporting single-digit salary increases:

• M1->M2 with a 2.4% salary increase, 0.88% bonus: “Balls in my throat”
• A2 (no promotion) with a 2.13% salary increase, $1000 (1.04%) bonus: “”
• M3->M4 with a 0% salary increase, 2.93% bonus: “Rethinking life choices”

On the assurance side, you have majority double-digit salary increases, plenty of promotions, and zero crying emojis.

This S3 in consulting with a 0% salary increase and a 0.74% bonus gets it: “They want us to quit.”

Craig here gets it too:

This is a back door to way to reducing headcount without firing people. If you aren't getting a raise and have met all production goals, then they are indirectly telling you "you're fired".

— Craig Hausz, CPA (@CPATaxTeam) August 5, 2024

Repeat after me: They want you to quit.

They want you to quit.

They want you to quit.

Headlines about mass layoffs are ugly and make clients skittish. Why do that when they can just discourage people right out the door? It seems pretty obvious that’s what’s happening here.

To be clear, they’re doing layoffs too. Guess that attrition is still way too low.

For fiscal 2023, EY US reported 12 percent revenue growth from FY22 for total revenue of $21.5 billion. No specifics yet on just how bad the year ending June 30, 2024 ended up being.

The post Comp Season PSA: If You’re Disappointed, It Might Be Because They Want You to Quit appeared first on Going Concern.

Good morning! I trust everyone had a good weekend.

Thomson Reuters covers value pricing versus traditional fee. Important quote:

Anyone looking to bring their accounting practice into the 21st century should give that a look.

With the 2024 INSIDE Public Accounting Top 500 officially out, expect many more press releases like this one from RSM:

“As the leading provider of professional services to the middle market, our vision is to be known globally for delivering innovative solutions, lasting value and confidence,” said Jiten Shah, chief financial officer with RSM US LLP. “Being once again named number five on the IPA Top 100 list demonstrates how our global purpose of instilling confidence in a world of change is resonating with clients who turn to us for our insights and services, and with our people who consistently rank us as a great place to work.”

RSM took the fifth spot on this year’s IPA Top 500, we’ll be doing a full dive of this much-anticipated annual dick measuring contest later in the week.

How are CEOs feeling these days? The summer 2024 Fortune/Deloitte CEO Survey finds:

• Seventy-three percent of CEOs are optimistic about their company performance for the next 12 months.
• Over half (51%) of CEOs are confident in their organization’s ability to weather geopolitical instability, which is the top concern of 60% of survey respondents.
• Forty-three percent of CEOs are confident in their organization’s ability to navigate inflation.
• Approximately 4 in 10 (43%) of CEOs have implemented Generative AI (GenAI) into their organizations to drive innovation.

Financial Review says government contracts are way down at down under Big 4 firms. Gee, wonder why?

The value of federal government work outsourced to the big four consulting firms has crashed under Labor, with KPMG, EY, PwC and Deloitte inking just $607 million in new deals last year, the lowest level in five years.

That was down nearly 50 per cent from a peak of $1.2 billion in 2021-22, excluding extensions, with KPMG, EY and PwC all recording substantial revenue falls, which contributed to a wave of layoffs.

LOL PwC. Scyne is the government advisory practice PwC sold off for an Aussie dollar last summer.

Related to the above, Financial Review published an excellent long read on what it was like inside PwC when the tax scandal story was breaking last year, part one in a series.

Describing an emergency webcast attended by the firm’s 900-some partners and led by then-CEO Tom Seymour that broke the news to the partners that some, uh, not good stuff was happening:

He faltered as he delivered his own bombshells: “six to eight” partners who shared the confidential tax information were still at the firm and, worse, Seymour himself had received some of the emails. The disclosures were not well received.

“We thought Tom was going to go,” says one attendee. “We couldn’t believe it, he was quite cocky … when he said he was on the emails, that’s when I knew we were f—ed.”

A second says: “Everyone couldn’t believe he had lied to us. Nobody wanted him as leader. A third says: “Tom was in a really bad state … [he] knew he was toast.“

“The webcast was their first chance to hear from the CEO. On a split screen to Seymour’s right was then-chairwoman Tracey Kennair; she said little, but cycled through various glum expressions,” writes Edmund Tadros.

Go read it.

Here’s a topic we haven’t discussed in a while: IFRS and fair value. Andy Haldane, who is chief executive of the Royal Society of Arts and former chief economist at the Bank of England, writes an FT opinion piece:

Accounting rules rarely arouse excitement — even among accountants. This neglect is misplaced. Accounting is the DNA of capitalism. And accounting rules have been pivotal in shaping the fortunes of companies and economies over many centuries, for good and ill.

Historically, accounting systems have been used to explain the rise and fall of nations ever since their emergence in ancient Mesopotamia. Goethe called double-entry bookkeeping one of the finest inventions of the human mind. Political philosophers such as Adam Smith and Max Weber assigned accounting systems a central role in explaining the flourishing of modern corporations and economies. 

That is not to say these rules have been uncontroversial. A particular bone of contention has been the accounting valuation of assets, whether at market prices (“fair value”) or historic cost.

…

Today, as in Depression-era America, IFRS may not be among the finest inventions of the human mind.

Two recent SCOTUS cases are making CPAs nervous according to soon-to-be-exiting AICPA President, CEO, and 17th century doily collector Barry Melancon:

Two recent Supreme Court decisions involving the power of government agencies are a “big deal” for the accounting profession because they introduce a level of uncertainty that makes some tax practitioners uncomfortable, AICPA & CIMA’s CEO said recently.

The reality, in the area of tax law, is that “our profession generally likes certainty,” CEO Barry Melancon, CPA, CGMA, said on a recent AICPA Town Hall. ” … We like to be able to get to a conclusion. We’d like to know something can be done and [that] there’s this precedent and there’s [an] interpretation that this supports a tax strategy. And there’s going to be a significant amount of uncertainty in these things going forward, absent some new, different court decisions.”

“Under Loper Bright, federal judges can rely on IRS expertise and experience, but they do not have to, she said. Thus, Loper Bright ‘most likely will affect future rulemaking within the IRS.’ Under Corner Post, on the other hand, ‘you could have a regulation that’s over 20 years old, but you’re injured now,’ and since the statute of limitation does not start to run until the taxpayer is injured, the regulation can be challenged long after it was promulgated. This will cause ‘lots of exposure for the IRS,'” said Melanie Lauridsen, the AICPA’s vice president–Tax Policy & Advocacy.

Aaaaand that’s it for now. If you see an interesting story, have a tip, or just want to gripe do feel free to send me an email or text the tipline at 202-505-8885. And you better have a good week OR ELSE.

The post Monday Morning Accounting News Brief: Inside PwC When Scandal Breaks; SCOTUS Makes CPAs Nervous | 8.5.24 appeared first on Going Concern.

“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.”

“US accounting firms rethink global networks,” Financial Times 7.30.24

We’ve always said firms should take more risks and learn to be proactive rather than reactive but I’m not sure this is what we had in mind.

For shits and gigs, I pulled out my tarot deck to get a quick single-card insight into the near future for accounting firms.

After a thorough shuffling of the deck and a brief reflection on the current state of the profession — particularly the PE deals of the last couple months — I pulled chariot reversed (deck is Blooming Cat btw).

Says Labyrinthos of chariot reversed:

Reversed Career Meaning	Reversed Finances Meaning
lack of ambition, too aggressive in career goals	rushing into or hesitant about financial decisions

Career Meaning – Reversed Chariot

Reversed, the Chariot can signal either a lack of ambition, focus or drive, or alternatively, too much of it. Ultimately, this card brings up questions about how forceful or aggressive you are when pursuing your goals. Are you someone that waits around passively for things you want to happen, hoping that they’ll fall in your lap? Or are you so forceful, that you are inconsiderate of others in your pursuit of success? Both approaches can bring you trouble. Being aggressive to the point of hostility can backfire on you, while being so passive can never bring you the kind of happiness you desire. Are you okay with either of these options? What does a healthy middle ground look like?

I’m sure it’s fine. Anyway, feel free to sound off in the comments about the direction things are headed or, if you prefer, you may ruminate to yourself. Have a good weekend.

The post Weekend Discussion: We’re in the ‘Throwing Spaghetti at the Wall’ Stage of Accounting Firm Strategy appeared first on Going Concern.

Just the other day, Moved on in Arizona asked a question about workplace etiquette, specifically if it’s OK to complain about your colleagues constantly dipping out to do stuff for their kids if you yourself don’t have any. He’s since resigned but his boss keeps checking in to see how he’s doing. He writes:

DEAR ABBY: I worked for 11 years in the accounting department of a busy law firm.

During my tenure, my three much younger colleagues married and started families. Due to the inevitable trials of raising kids, planned, unplanned and often simultaneous absences became commonplace, which left me to run the department alone.

During my last performance review, which I presumed to be confidential, I shared with our boss my exhaustion and health-impacting stress.

My appeal for additional personnel was rejected.

Rather than address the matter in the context of firm productivity, our boss informed each of my co-workers that I had complained about their chronic absenteeism, drawing charges that I, a middle-aged male with no children, was “insensitive” to their familial obligations.

I mended fences to the best of my ability but resigned shortly thereafter. I never confronted my boss, and he was never aware I had any knowledge of his manipulation. He now contacts me monthly to feign concern for my health and tell me how much I am missed, all of which is disingenuous.

As my former colleagues have now left the firm and face no retribution, I would like to end his contacts with an appropriate expression of my contempt. Or should I simply block him and be done with it? — MOVED ON IN ARIZONA

Abby — real name Jeanne Phillips who’s held the Abby post since 2000 — essentially curved the childless accountant vs. parents issue completely and said only that Moved On should move TF on and ignore his boss. “As a former employee of that firm, you are under no obligation to have any more contact with your former boss,” she wrote. “If you are still in the working world, refrain from venting about your contempt.”

What do we think? Should he tell his ex-boss off? Should he have complained in the first place? Was the boss a dick for snitching?

Related:

The post Childless Law Firm Accountant Asks If It’s Cool to Complain About Your Coworkers’ Familial Obligations appeared first on Going Concern.

Completely unsubstantiated rumor of the day: pic.twitter.com/xNiStHwgnB

— Going Concern (@going_concern) July 24, 2024

Didn’t hear much on the wire after that except a small handful of people who said this could be in the works but couldn’t or wouldn’t offer any information beyond that. Gonna be honest with you here fam, I was sure this was a troll.

IT’S NOT. This press release dropped this morning:

CBIZ, Inc. (NYSE: CBZ) (“the Company”), a leading national provider of financial, insurance and advisory services, today announced that it has entered into a definitive agreement to acquire the non-attest business of Marcum, LLP (“Marcum”), which will make CBIZ the seventh-largest accounting services provider in the U.S. with approximately $2.8 billion in annual revenue.

Concurrent with the closing of this transaction, the attest business of Marcum will be acquired by Mayer Hoffman McCann P.C., a national independent CPA firm with which CBIZ has had an Administrative Service Agreement for over 25 years.

The cash-and-stock transaction is valued at approximately $2.3 billion. It is expected that approximately half of the transaction consideration will be paid in cash and the remainder shares of CBIZ common stock.

CBIZ even explained their reasoning for this transaction, in bullet points no less.

Expected Transaction Benefits Post-Close:

• Market Position: Solidify position as a leading provider of professional services to the growing middle market and seventh largest accounting services provider in the U.S.
  
• Growth Strategy: Scale accelerates growth and further positions CBIZ as an acquirer of choice
  
• Our People: Attract and retain the best and brightest in our industries, enhance learning and development aligned to meaningful career paths and expanded growth opportunities
  
• Client Experience: Offer an unmatched breadth of services and depth of expertise including the development of innovative and actionable solutions
  
• Industry Expertise: Combined industry knowledge enables access to new sectors and expands presence in target industries
  
• Innovation and Technology: Enable greater investment in technology to support data-driven insights and solutions while driving innovation, increasing efficiency and enhancing performance
  
• Shareholder Value: Expect to be accretive in 2025, with an estimated contribution to Adjusted earnings per share of approximately 10%

“Today marks the most significant transaction in CBIZ’s history as we announce our agreement to acquire Marcum,” said Jerry Grisko, President and Chief Executive Officer of CBIZ. “At closing, our company will have combined annual revenue of approximately $2.8 billion, more than 10,000 team members and over 135,000 clients. Together, we will provide a breadth of services and depth of expertise that is unmatched in our industry, allowing us to bring a broader array of high-value solutions to our combined client base. This transaction enables CBIZ to strengthen our presence in key markets, continue to attract and retain top talent, and innovate through technology. We are excited about our future together and the opportunities it will provide our people, the solutions we will bring to our clients and the value we expect it will create for shareholders.”

Jeffrey Weiner, Chairman & Chief Executive Officer of Marcum, said, “CBIZ and Marcum share a dedication to providing high-quality innovative professional services to our clients, and personalized, local client relationships supported by national resources. By joining forces, we will capitalize on our strengths and leverage our similar models to bring more diversified services and even greater subject matter expertise to our clients and attract new business. We both have a proven track record of growth through successful acquisitions, and we are excited to bring these two best-in-class organizations together.”

More to come later.

Update 11.1.24: It’s official, the $2.3 billion deal is done.

Related:

The post Turns Out The Tipster Who Said Marcum and CBIZ Are Merging Wasn’t a Troll After All (UPDATE) appeared first on Going Concern.

Thanks to the tipster who reached out to alert us to this situation.

Apparently eager CPA exam candidates have once again crashed NASBA’s delicate and temperamental system leaving candidates who sat for core sections AUD, REG, and FAR looking for hints of their scores ahead of the July 31 target release day highly disappointed. And they aren’t showing any remorse for having done it either.

The story as relayed by our tipster:

Just wanted to let you know, in case you hadn’t heard, that all of us CPA candidates have managed to crash the NASBA CPA portal as we constantly refresh it in the hope of seeing our exam scores. The official release date is tomorrow, but that usually means a pass/fail indicator would come today. And for all we know it has, but all we can see is “Sorry, the server encountered an internal error.” You’d think NASBA would plan for this when they created such infrequent score release dates. Sigh.

As expected, NASBA’s Twitter is getting reply-bombed. Is this what the kids call a ratio?

In preparation for the score release you will need to set up your CPA Portal account (if you haven’t done so already) to view your score online (unless you receive your score from your board). Click to learn how: https://t.co/TK8LQSCpxT

— NASBA (@NASBA) July 30, 2024

Let’s hope they get it together by the next core release day of Halloween. We’ll keep you updated on this developing situation.

UPDATE: We were told moments after publication that the system is back up. Whew.

The post BREAKING NEWS: CPA Exam Candidates Broke NASBA’s Sh*t. Again. appeared first on Going Concern.

India Today explains why US firms love hiring accountants in India:

Consequently, American firms are increasingly turning to other countries to fill the gap, particularly eyeing India for its highly skilled accounting professionals. Indian accountants, familiar with international accounting standards, present a valuable solution to the US accounting crisis. From a business perspective, offering offshore positions to Indian accounting experts can prove to be extremely beneficial for US firms, helping them lower costs, provide easy access to a global talent pool, and achieve scalability. Given the high demand for such skilled professionals, Indian nationals have an excellent chance to explore lucrative careers in the United States and enable themselves to excel in the global market, contributing significantly to the country’s economy.

…

In essence, the US accounting crisis presents a unique opportunity for Indian accountants. With the help of globally recognised certifications and enrolling in STEM-designated programs, Indian professionals can position themselves at the forefront of the global accounting industry by filling the workforce gap. These pathways not only enhance their career prospects but also ensure they become invaluable contributors to the dynamic US job market, setting the stage for a fulfilling professional journey.

All this time we thought it was going to be robots that take accounting jobs, it was Indians all along. Oh and reminder: the Institute of Chartered Accountants of India (ICAI) is working on a plan to consolidate India’s 96,000 little accountancy firms into mega-firms that they think could compete with Big 4 on the global stage.

INSIDE Public Accounting continues to tease the upcoming release of the IPA 500. Here they talk about the changing face of accounting firms:

While the profession is taking a concerted, multi-pronged approach to increasing the number of accounting graduates and prospective CPAs, IPA 100 firms have had to pivot due to the small pool of potential hires in the meantime.

As a result, last year’s data shows more IPA 100 firms were increasing the hiring of talented non-CPAs. The percentage of non-CPA professionals was 50.3% in 2019, but 55.9% in 2023. The percentage of non-CPA equity partners was 8.0% in 2019, but 10.1% in 2023.

Another weed-loving American firm has gotten hand-slapped by Canadian audit regulators:

According to its enforcement action against Macias Gini & O’Connell, CPAB inspected three audit files and identified significant inspection findings in all three files, which “indicated continued concerns over audit quality.” The action reports a lengthy list of violations of Canadian Auditing Standards and PCAOB rules. At the time of CPAB’s 2023 inspection, MGO audited fewer than 50 Canadian “reporting issuers” (i.e., public companies), and approximately 20 of such companies in the US.

The American firms were particularly active in the Canadian cannabis market. On its Facebook page in 2018, MGO declared that it “proud to have provided professional services to a growing number of cannabis businesses that have successfully gone public in Canada.” As an example of the turbulence in the market, cannabis company Bellrock Brands announced that it had changed auditors from Manning Elliott LLP, which has been censured, to Macias Gini & O’Connell LLP, also censured, due to audit delays.

This news came out on the 17th but we missed it because we aren’t on their PR list. PwC Philippines opened a learning hub:

Isla Lipana & Co./PwC Philippines launches its Learning and Experience Hub, a pioneering facility that combines education, employment and community engagement. Opening on 17 July at the PUP BPO Center, next to the Polytechnic University of the Philippines (PUP) main Manila campus, this groundbreaking initiative sets a new benchmark in bridging the gap between academia and the industry, creating unparalleled opportunities for students and communities.

The hub is the first of its kind in the industry, designed to foster a collaborative environment where learning and practical experience converge. It reflects PwC Philippines’ commitment to innovation and excellence, providing a sustainable platform that significantly supports the holistic development of students and promotes inclusive community development.

Trying to put my finger on which 80s fast food restaurant this looks like…

TIL there’s a firm in the UK with the same name as a certain hot British actor:

Accountancy firm Clive Owen LLP has welcomed 15 new colleagues, including three at its York office, the largest intake of graduates the firm has appointed in its 40-year history.

Clive Owen LLP, which has offices in Darlington, York, Durham and Middlesbrough, has seen a 16% increase in colleagues over the last year.

Now with a 148-strong workforce, the firm is one of the largest independent accountancy practices in the north of England.

I’d make some accounting-related innuendo here but it’s early and I haven’t gotten my daily dose of sugar-free Red Bull yet.

An imported Grant Thornton partner makes a list:

Grant Thornton, one of America’s largest brands for audit, assurance, tax, and advisory services, is celebrating a new award win. Becky Linnett, an Audit partner in the firm’s Miami office, has been named a ”40 Under 40” honoree by the South Florida Business Journal. This prestigious list recognizes talented individuals under the age of 40 who have made an impact in their fields, companies and communities.

In addition to her Audit role, Linnett leads the Real Estate & Construction industry group in South Florida, providing high-quality, personalized services to a wide variety of clients in those industries. These dual roles represent the latest chapter in a burgeoning career on both sides of the Atlantic.

Linnett began her career at Grant Thornton U.K. and moved to the U.S. permanently following a secondment in California. There, she managed relationships with major clients across Southern California and the Bay Area. After developing a stellar reputation for client service, she earned an opportunity to move to South Florida and serve one of the firm’s largest asset management clients. Linnett quickly rose to the position of Audit growth leader for the South Florida asset management practice, and she was named a partner at the age of 34.

We’ll probably write this one up as its own thing but for now, the Financial Reporting Council had another year of record fines against audit firms. However, it was only eight fines total. KPMG’s massive Carillion fine did the heavy lifting to pump those numbers up.

Britain’s accounting watchdog dished out a record amount in fines last year as it concluded a number of high-profile investigations, including into audits of Carillion and London Capital & Finance.

The Financial Reporting Council, which oversees the nation’s audit and accounting firms, issued financial sanctions totalling £48.2 million in the year to the end of March, surpassing the previous record of £46.5 million set in the 2021-22 financial year.

The record fines show that the watchdog is starting to bare its teeth, even before its transition into the beefed-up Audit, Reporting and Governance Authority, which Labour has promised to prioritise.

Earlier:

In government contract news, Washington Technology talks about a possible conflict of interest. Again.

The Government Accountability Office’s denial of Guidehouse’s protest over an audit support contract that went to Deloitte outlines the right way and the wrong way to determine if there is a conflict of interest.

Guidehouse has twice protested the Defense Department’s choice of Deloitte for an $80 million contract to support the DOD comptroller.

As we have previously reported, both protests alleged a conflict-of-interest because one of the DOD officials working on the procurement was a former Deloitte consultant. That person still had a 401(k) from when they were employed by Deloitte.

In the first protest, GAO said that DOD hadn’t documented the investigation into the alleged conflict. In fact, GAO said it could not rule on whether there was a conflict or not because DOD did not provide any evidence of what they had done.

GAO sent the contract back to DOD to investigate the possible conflict.

DOD did that and more. For a second time, DOD awarded the contract to Deloitte and Guidehouse again filed a protest over that DOD official’s connection to Deloitte.

GAO both denied that second protest and laid out what DOD did this time around that mitigated the possible conflict, according to the decision released Thursday.

EY analyzes consumption:

The latest wave of the EY Future Consumer Index found that influencers are growing in their power to shape consumer opinions and purchase decisions. Not surprisingly, their presence in daily social feeds means they are more likely to reach younger consumers (Millennials + Gen Z ages 18 to 49)—66% say they follow an influencers vs. 27% of older consumers (Gen X and Baby Booms ages 50 to 65+). More interesting is the fact that only a quarter (25%) of consumers follow someone for being famous. This significant difference underscores how much brands need to pivot away from tried-and-true marketing strategies so their brands and products can stay relevant to future consumers.

Hold up, millennials are 49 now???? I must have missed that memo, I thought I was the oldest, most geriatric of the millennials at early 40s.

PwC wrote something helpful on the SCOTUS Chevron decision and its potential tax implications:

The United States Supreme Court on June 28 released its opinion in Loper Bright Enterprises v. Raimondo, and Relentless, Inc. v. Department of Commerce, overturning the Chevron doctrine that generally required federal courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute. For more details regarding the court’s decision see our previous PwC Tax Insight: US Supreme Court overrules Chevron Doctrine.

In the tax context, the Supreme Court’s decision to overrule Chevron may result in more legal challenges regarding Treasury and the IRS’s interpretation of Code sections. This more stringent judicial review could invalidate existing Treasury regulations if the courts reach a different interpretation of the statutory text. Specifically, while a court generally was required to defer to an agency’s interpretation of an ambiguous statute under Chevron so long as it was ‘permissible’ (or, more specifically, not “arbitrary, capricious or manifestly incompatible with the statute”), the courts now may hold in favor of a litigant’s challenge to regulations if the regulations do not represent the ‘best’ reading of the statute. This is a potentially significant shift. Taxpayers challenging regulations might find courts more receptive to their arguments, potentially leading to less flexibility for Treasury to effect tax policy changes through regulations and to greater uncertainty in the application of Treasury regulations until Congress clarifies a respective statute or Treasury issues new regulations that withstand judicial scrutiny. 

Aaaaand we’re done. Hope you found that helpful or at least a decent way to waste a few minutes on a Monday. Please email or text if you see an interesting story, have a tip to share, or just want to complain. Have a great week, you.

The post Monday Morning Accounting News Brief: The Age of the Non-CPA; PwC Explains the Chevron Thing | 7.29.24 appeared first on Going Concern.

The study states that accountants and bookkeepers are embracing AI at a faster rate than other sectors in the UK; 39% of businesses in the UK are piloting or adopting AI while 54% of the accountants and bookkeepers surveyed claim the same. Paint us skeptical on that despite the fact that accountants can always be trusted implicitly.

Ahem…

Some key findings, most notably the one from which this post’s title is derived:

• AI is set to become a driving force for growth. Practices who are leading the way on AI expect to hire ten times more employees and expect their revenue to increase three times faster than those not currently using AI. [Ed. note: take a look at the chart below to clarify this bit. As it’s written here, one might think AI-friendly firms are increasing their ranks by 10x]
• Accountants and bookkeepers are technology optimists. 61% believe AI will create more opportunities than risks with nearly two-thirds (68%) feeling confident that they will be able to adapt to AI.
• 56% of surveyed companies believe AI adoption is crucial for attracting next-generation talent, especially for improving work-life balance.

Last month, EY’s global Vice Chair of tax Marna Ricker said in an interview with Microsoft that she’s seeing her people saving up to 14 hours a week thanks to AI tools. (In response to that news, a GC commenter wrote: “Top tip for service providers who charge on a T&M basis: when showcasing innovation, think carefully before signaling to the market that you’re getting the work done in much less time. Expect the next question from your client to be “so how much, exactly, will our fees be decreasing?”) That interview came days after EY announced a deal with Microsoft to deploy Microsoft Dynamics 365 Sales and Copilot for Sales to 100,000 EY professionals across 700 offices and 150 countries, a deal that would make EY one of Microsoft’s largest customers worldwide. We eagerly look forward to hearing how work-life balance has dramatically improved at EY due to this innovation.

But let’s get back to the Sage/Demo/ACCA survey. “AI adoption in accounting promises economic advantages, improved workplace well-being, and enhanced job satisfaction by automating routine tasks and attracting new talent,” said Sage Chief Technology Officer Aaron Harris.

Some more survey results and important footnotes at the bottom:

Said Alistair Brisbourne, Head of Technology Research at the ACCA and owner of the most British-sounding name you’ll read all day: “As the report attests, professional accountants have a firm grounding in the risks associated with AI, data use considerations, and potential efficiency and productivity benefits. As an industry, it is evident that the accounting profession is well placed to utilize these skills to create clarity for businesses and support the development of appropriate frameworks.”

Sage Research: Accountant AI Trailblazers to Boost UK Economy by £2 Billion [Sage]

The post AI is Coming to Save You From Work-Life Imbalance (Allegedly) appeared first on Going Concern.

Bring a lot of enthusiasm to your role! Teams appreciate and thrive with interns who are eager and full of energy. Your positive attitude can energize everyone around you!

Just going to leave this here!

Along with National Intern Day comes a top 100 internship programs list from NID creators WayUp. 2024’s list should be out soon, here’s 2023’s in the meantime. See anyone missing?

The post Tomorrow is National Intern Day appeared first on Going Concern.

What do the initials BDO on Billy Horschel’s golf hat represent?

This is actually funny because they really didn’t know what BDO is. Which is fine because up until today we didn’t know who Billy Horschel is.

Horschel is sponsored by BDO, a professional services company that specializes in tax and business services for companies. The golfer has been seen wearing the logo on his left collar of his shirt or outerwear during tournaments, but the hat he’s wearing today has caught all of our attention.

We first thought it was LBDO, but realized immediately that the “L” isn’t really a letter and is just part of the design. He was playing yesterday with his hat on backwards as the rain was complicating things for everyone on the course.

And here’s another article from the sports corner of the internet that probably confused the hell out of the AI when it was asked to write it:

Do you ardently follow golf fashion? [Ed. note: no] Then you must be eager to find out what Billy Horschel wore on the greens. One of the most fashionable golfers around, Billy never fails to amaze, be it his Ralph Lauren polos, FootJoy shoes, or quirky printed trousers. And we know, despite finishing runner-up in the 2024 British Championships, he did not disappoint you with his fashion choices once again. After all, only a few could have carried that backward hat look on a golf course! While looking at that, we can not miss the BDO logo on it. What does it stand for?

With an instant glance, it might appear like LBDO. But the ‘L’ is not a letter and a part of the design. BDO stands for Binder Dijker Otte. It is the 5th largest global accounting network and has over $12.8 billion in revenue. The company became a sponsor of the 62nd OWGR-ranked golfer in 2022. But do you know why the association was first-of-its-kind?

The 8x PGA tour winner was BDO’s first US golf brand ambassador. During his three-year partnership with the firm, Billy is supposed to wear its logo on his jersey and cap.

And here’s Mr. Horschel rocking that LBDO hat and a sharp Ralph Lauren sweater:

After finishing T2, Billy Horschel had high praise for Xander Schauffele.

Also, he'll be grinding away on the range at the 3M Open on Tuesday. pic.twitter.com/q7QmbP196e

— Golf Digest (@GolfDigest) July 21, 2024

It seems random sports blogs weren’t the only ones that thought Billy’s hat said LBDO…

Always think about your logo in a one color versus multi color format.

BDO, the accounting firm who sponsors Billy Horschel- who led #TheOpen just lost out on a lot of search traffic to…ahem, LBDO pic.twitter.com/PyS1xgZJio

— Jordan Rogers (@JordanRogers26) July 22, 2024

What’s the emoji for? *Googles* Oh.

Losing out on some website hits from random golf fans probably wouldn’t be too bad except for one thing. The real LBDO is an Australian “sexual wellness” company with the tagline “Feel good about feeling good.” In other words, they sell stuff to help get you off.

I did some research, and Billy Horschel is sponsored by BDO, not LBDO, which is NOT a company that distributes boner pills

— Gstaad Blackledge (@loljocks_grimey) July 20, 2024

Oh no. The LBDO blog is packed with helpful articles such as “A five step guide to getting off with your shower head” and the first Instagram post we saw was advice on how to get into piss play. (BTW they’re currently having an Orgasm Day Sale if anyone’s interested. Not an ad.)

Let’s not dive into that world, OK?

At least this isn’t as controversial as the comments that made KPMG cut ties with Phil Mickelson and his hat forever back in 2022, it’s only sex toys. Billy may want to think about asking for a two-color hat though.

The post Golf Fans Everywhere Now Think BDO Sells Dildos and Lube appeared first on Going Concern.

Anyway, this became effective on July 1:

The AICPA and the National Association of State Boards of Accountancy (NASBA) announced an expansion of international testing availability of the U.S. CPA Exam, adding the Philippines.

CPA candidates in the Philippines can begin registering for the CPA Exam now. There will be three testing centers in the country — two in Manila and one in Cebu City.

The AICPA and the Philippine Institute of CPAs agreed in April to work together to share continuing professional education courses and access to conferences and live events, according to a news release.

The AICPA and NASBA offer the CPA Exam in 18 countries besides the Philippines.

I remember a time not too long ago when all international candidates had to travel to the US to sit. About 13 years ago — August 1, 2011 to be exact — the first international CPA exam candidates not required to travel to the US sat for the exam in Japan, Bahrain, Kuwait, Lebanon and the United Arab Emirates.

India joined the party in 2014 at which time the AICPA said this in a press release:

The U.S. CPA Exam is administered internationally as a service to U.S. citizens living abroad and foreign nationals, as well as in response to the escalating international demand for the U.S. CPA license. In recent years, Indian candidates are among the largest groups of international candidates who have traveled to the U.S. to take the CPA Exam. Opening the CPA Exam in the Middle East to Indian candidates increases their testing options.

At that time, candidates from India still had to travel to the Middle East to test (duh, it’s right there in the preceding paragraph). In April of 2020, the overlords of the CPA exam announced they were opening up testing in India to candidates from India and partially credited the Rona for the change. Said NASBA in that announcement:

During this extraordinarily challenging time, we know you have many concerns — the health of your families and friends, your coworkers and your communities. The Coronavirus pandemic has affected all of us in ways we could not have imagined. Nearly overnight, the world has changed.

Amidst this disruption, we want to help alleviate one concern you may have — taking your U.S. CPA Examination. We know you have dedicated an incredible amount of time preparing for this next step in your professional development. We also recognize that current travel restrictions, test center closures and other factors make it difficult or impossible for you to take the U.S. CPA Examination as planned. So, to support you on your pathway to CPA licensure, and to maintain your health and safety, we will now administer the Exam in India at eight Prometric test centers (Ahmedabad, Bangalore, Calcutta, Chennai, Hyderabad, Mumbai, New Delhi and Trivandrum). We hope the convenience of taking the Exam in your country eases some of your burden while you think about your family, friends and colleagues.

And here we are. This is a current list of international locations offering the US CPA exam as of, well, now (source: NASBA):

• Bahrain
• Brazil
• Egypt
• England
• Germany
• India
• Ireland
• Israel
• Japan
• Jordan
• Kuwait
• Lebanon
• Nepal
• Philippines
• Republic of Korea
• Saudi Arabia
• Scotland
• United Arab Emirates

Related:

Update: r/accounting is reacting to this news and it isn’t pretty.

The post You Can Sit for the CPA Exam in the Philippines Now appeared first on Going Concern.

You know what does matter? NEWS. Here’s some.

OH MY GOD they’ve gassed up the “Free Candy” van now.

Amid shortage of new blood, accounting firms recruiting teens

Jeremy Cole was throwing candy at high school students on a Tuesday afternoon at Siena College earlier this month.

Not exactly the type of behavior one would expect from an accountant.

But Cole and other professionals in the accounting industry and [sic] willing to try almost anything these days to address a growing workforce crisis caused by two major trends.

The reasons: mass retirement of boomers and declining accounting grad numbers. Same old.

Related:

If you were curious, CrowdStrike is a PwC client.

The company’s annual report, filed in May, shows a confident position with the company telling its investors that Falcon is the future of the cybersecurity industry.

“Using cloud-scale AI, our Security Cloud enriches and correlates trillions of cybersecurity events per week … to create actionable data, identify shifts in adversary tactics, and automatically prevent threats in real-time across our customer base,” the filing reads. “The more data that is fed into our Falcon platform, the more intelligent our Security Cloud becomes, and the more our customers benefit, creating a powerful network effect that increases the overall value we provide.”

The filing includes an audit report from CrowdStrike’s accounting firm PricewaterhouseCoopers LLP. That audit found healthy numbers for the company, with an increase in revenue and shareholder equity year-over-year from 2023.

Further reading: ‘Painful’ wake-up call: What’s next for CrowdStrike, Microsoft after update causes outage?

This gent has no idea what he’s in for. But he’s already wearing the right shirt.

The firm is called Ashmole & Co. Say that three times fast.

Former Trump Organization CFO Allen Weisselberg was released from Rikers on Friday:

“Allen Weisselberg was released from custody today and has been reunited with his family,” his attorney Seth Rosenberg said Friday.

Friday’s release marks the second time Weisselberg completed a sentence at Rikers. In 2022, Weisselberg pleaded guilty to 15 state crimes related to a scheme to evade more than $1.7 million in taxes, and received a similar five-month sentence, after which he was released after 100 days.

NASBA’s soon-to-be CEO Daniel Dustin made some leadership picks that will be effective August 1:

The National Association of State Boards of Accountancy (NASBA) President and CEO elect Daniel J. Dustin, CPA, has selected Kent A. Absec, Brenner Allen, Esq., William A. Emmer, CPA, and Sedrik Newbern to join the leadership team at NASBA, effective August 1, 2024. These changes to leadership follow the retirement of current NASBA President and CEO Ken L. Bishop.

Earlier:

EY Germany’s former top dog is fighting the big ass fine he got for Wirecard:

EY’s former Germany boss Hubert Barth is to challenge a €300,000 fine for alleged violations of professional duties during the Big Four firm’s audits of Wirecard.

Germany’s audit watchdog Apas last year fined EY €500,000 and banned the firm from taking on any new listed audit clients in Germany for two years over its failings. It also announced penalties of between €23,000 and €300,000 to five unnamed current and former staff. These fines against individuals were formally imposed last month.

The largest of the personal fines was for Barth, according to people familiar with the decision. His lawyer Jan Bockemühl told the Financial Times that he would appeal against the Apas decision on behalf of his client as he considered it “incorrect” from both a legal and a factual point of view.

KPMG and Avalara have entered a “formal alliance.”

Avalara, Inc., a leading provider of tax compliance automation software for businesses of all sizes, today announced a strategic alliance with KPMG LLP, the audit, tax, and advisory firm to deliver greater value to enterprise businesses across industries. The new alliance allows organizations to leverage the combined power of Avalara’s compliance automation technology – including indirect tax calculation, returns, exemption certificate management, cross-border compliance, e-invoicing, and registrations – and KPMG’s deep expertise in tax consulting and advisory, in addition to ERP implementation capabilities, resulting in improved tax compliance management, operational efficiency, and risk management.

Elsewhere in the House of Klynveld, AFR’s Neil Chenoweth writes about some old ghosts coming back to haunt the firm in Australia:

For the past 11 months, the firm has been studying historical allegations with varying degrees of focus. This follows a complaint made by a former, quite senior, partner about KPMG people behaving badly, much of it dating from the 1980s and ’90s (this masthead has written recently about Chris Jordan’s time at KPMG, but this is unrelated to that).

Where to begin? Perhaps with the partner who is alleged to have had a client replace his garage door in 1994, a second client who painted his house, and a third client who handsomely provided the partner with a Nissan Maxima sedan: all of these services were in return for writing off their KPMG fees.

Talk about full service. It’s quite a progressive payment arrangement. So little paperwork.

There are allegations of accessing client trust accounts to strip out tax losses; partners taking secret commissions; diverting the residual of a client’s estate to a partner’s private company; and moving $7000 from a company which was being transferred overseas into the KPMG trust account. Apparently, an enterprising partner used that money to buy a jet ski. As you do.

And this might be the craziest of all the former partner’s claims:

The most picturesque claim is that in 1984, a partner allegedly had his wife smuggle $625,000 in cash from Singapore into Australia in her handbag for a client (yes, a KPMG spouse is the one with the giant clutch purse). This was after attempts to order staff members to carry the money failed to generate the necessary enthusiasm.

Governing writes about TV and film tax credits. TLDR they’re losers for the states:

From Marvel blockbusters to “The Walking Dead” series, many big hits have been filmed in Georgia due to the state’s massive production tax credits. Set at 30 percent with no cap on the number of credits that can be bought or sold, Georgia’s tax credit is one of the biggest in the country.

But Georgia was among several states where legislators have been reconsidering their film and TV tax credits. Following a state-funded audit last December that found the state loses money on the billion-dollar program, legislators proposed a bill to place caps on it.

The bill didn’t pass. State Rep. Long Tran, a former actor and stunt driver, says it’s too early to make big changes, especially with the industry just finding its footing again after COVID-19 destabilized the global film industry. “I’d like to see us hold off on making any changes for five more years,” Tran said before the bill was defeated in the state Senate. “But if we have to make a change, let’s do something that stabilizes the industry and makes people confident that they can come here.”

Think I’m gonna call it here. As always, dear reader is encouraged to reach out with any comments, complaints, compliments, or concerns. Text the tipline or send me an email if you know of some good happenings we should be talking about. Have a great week, you.

The post Monday Morning Accounting News Brief: They’ll Try Anything But Salary Increases; KPMG Partners Were Wildin in the 80s | 7.22.24 appeared first on Going Concern.

Financial Times is reporting that Grant Thornton US, now flush with all that private equity cash, is thinking about acquiring Grant Thorntons UK and Ireland. It all sounds very legit but who knows, just last week the rumor was that the Brit and Irish GTs were entertaining private equity capital for themselves. Supposedly.

FT:

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

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

More recently, Grant Thornton Ireland hired Deutsche Bank to begin a similar exploration of its options, said people familiar with the situation.

People familiar with the matter who have big mouths said all of this is in the early discussion stage.

So last week’s private equity rumor is starting to make more sense if there’s any truth to it. The Times said GT UK was working with advisers from Rothschild and “sounding out private equity firms over a potential deal.” When asked to comment on this, a spokesperson told The Times “As all businesses do, we continually evaluate the external business and economic landscape and explore various avenues that will drive growth for our firm. This enables us to make informed decisions about what’s best for our people, our clients and our firm. We are not actively engaged in any such transaction.” The GT Ireland spokesperson said basically the same thing: “In light of ongoing developments in our profession, we are constantly exploring strategic options to assess what is best for our clients, our people, and our firm.” Both firms gave a similar statement to FT for the latest story.

“Grant Thornton US believes that it can achieve significant synergies by combining the remaining consulting and tax businesses with those of the UK and Irish firms, according to people familiar with its thinking,” said FT.

The word “DYNAMIC” does not appear a single time in the Financial Times story.

The post Grant Thornton Wants to Have a Threesome? appeared first on Going Concern.

Now KPMG Australia is nuking its law practice. Fellow Americans reading this are probably like “KPMG has a law practice?” Well, it did. That’s a thing they’re allowed to do over there. It sounds like they finally arrived at the conclusion that’s fucking stupid and they should stick to what they know.

Writes Maxim Shanahan in Australian Financial Review:

The decision will cost dozens of jobs and marks the end of the big four consultancies’ ambitious attempt, launched at the peak of their influence, to take on established major law firms in traditional commercial practice areas.

KPMG Law’s Tax Controversy & Disputes practice will be incorporated into the firm’s tax division, but the big four firm will no longer operate its own distinct commercial law practice.

Ben Travers, head of the firm’s tax and legal division, said KPMG would now “look to further develop alliances with law firms that offer complementary services to ours, rather than invest in our own commercial law businesses”.

Sky News clip for the reading-averse:

The firm believes rolling the Tax Controversy & Disputes people into tax will work out much better than the separate law practice. “We have an ambition to be Australia’s leading firm in tax controversy and disputes,” said Ben Travers to AFR. “We believe focusing on [this area], and extending alliance relationships, will enable clients to better leverage broader capabilities to solve their issues.”

So who or what is next to go at KPMG Australia? Fiscal ’24 revenue is due to come out in August, wouldn’t be surprised if another significant slashing comes immediately after.

KPMG axes legal division, dozens of jobs to go [Australia Financial Review]

Related reading: The Reemergence of the Big Four in Law [Harvard Law School’s The Practice, 2016]

The post KPMG Australia Gives Up on the Idea of Competing With Big Law (or Medium Law, or Small Law) appeared first on Going Concern.

I wasn’t able to find any information on the average cost of those extra 30 units, probably because it varies so much so instead let me drop two relevant links. You all are welcome to tell us how much you paid for your 30 units in the comments (or by email).

Rethinking the 150-Hour Requirement for CPA Licensure [CPA Journal] This one does a pretty good job of explaining the current debate over 150 units as well as the arguments for and against.

Increasing Diversity in the Accounting Profession Pipeline: Challenges and Opportunities [Center for Audit Quality] This CAQ research, now exactly a year old, dives deep into why students aren’t pursuing accounting or, if they did, why they aren’t interested in getting licensed. According to their research, 81% of undergraduate accounting majors plan to get their CPA. This research talks extensively about why the remainder don’t go that route and the cost of those extra units comes up quite a bit. As you can see from the chart below, cost is a hurdle to both the to CPA and to not CPA groups.

What doesn’t come up at all in that research is how people who scrimped and saved to make those 30 units happen are going to feel if the requirement is suddenly lifted in their state. Hell, even people who could afford it might feel some type of way.

Discuss. And let’s keep in mind this is tagged as a crazy idea, not a plausible and immediately actionable one.

The post Crazy Idea of the Day: If 150 Units Goes Away, Refund Everyone’s University Fees appeared first on Going Concern.

This one from Fast Company is sort of related to accounting right? It certainly affects firms, particularly Big 4, as they require yearly sacrifices from the God of Higher Education to keep the machine grinding away.

The college-to-corporate pipeline is facing extinction. Here’s why

A third of Gen Z is skipping college before joining the workforce—and opportunities in the internet economy are a major reason why. It’s an inflection point that decades of corporate dread have been building toward. 

As the first generation to be raised by the internet, Gen Z didn’t spend our childhoods outside—we spent them online. We exchanged ideas and connected with one another over chatbots long before we learned how to prepare for an interview or apply for a job. We participated in makeshift economies in virtual games long before we opened a bank account or submitted a summer job application.

Our comfort in exploring the internet is why we don’t feel tied to traditional models of work and life that kept people busy for decades—especially as burnout, low wages, and debt continue to dominate headlines post-pandemic. For Gen Z (and the generations to come) inheriting this new reality, the question has evolved from “Where should I apply to college?” to “How can I make money online?”

This doesn’t bode well for the already unpopular accounting track.

An Ohio firm, Payne Nickles & Co. CPAs and Business Advisors, celebrates some promotions in the Sandusky Register. Check out this blurb:

Brennan Otto, a certified public accountant, recently received a promotion to partner in training in “recognition of his dedication, hard work and contributions to the firm,” according to a company statement.

Otto’s journey with Payne Nickles & Co. began as an intern during the tax seasons of January 2015 and January 2016 while he was still completing his degree. After graduating from Kent State University in 2016 with a bachelor’s degree in business accounting, Otto joined the firm full-time in December 2016.

In October 2018, Otto left Payne Nickles to explore opportunities elsewhere. But “recognizing the strong professional environment and growth opportunities at Payne Nickles, he returned to the firm in October 2019,” the statement read. “His experience during this period enriched his perspective and expanded his professional expertise.”

We probably won’t be writing up the recent PCAOB inspections for Deloitte Canada and Canadian megafirm MNP unless this week ends up being an accounting news desert (it’s mid-July, it could be) and we get desperate so here’s Canadian Accountant:

The Public Company Accounting Oversight Board in the United States released two new audit inspection reports this past week for Deloitte Canada and MNP LLP. After finding fault with Canadian audit quality in recent years — not only with regional accounting firms but with members of the Big Four in Canada — the US audit watchdog found little fault in its most recent reports.

MNP received a clean bill of health from the PCAOB for two audits inspected in 2022. According to the inspection report, the PCAOB found “no deficiencies that were of such significance that we believe the firm, at the time it issued its audit report(s), had not obtained sufficient appropriate audit evidence to support its opinion on the issuer’s financial statements.”

The conclusion is in stark contrast to the PCAOB’s previous inspection of MNP, which occurred in 2019, when it found deficiencies in 67 per cent of the three audits it reviewed.

Deloitte Canada’s inspection report focused on five audits inspected by the PCAOB — the same number inspected by the PCAOB in 2021. In both cases, the US audit watchdog found deficiencies in 20 per cent of the audits reviewed, four of which were audits in which the Big Four accounting firm was the principal auditor. In Deloitte’s audit of “Issuer A,” the PCAOB identified deficiencies in the firm’s financial statement audit related to revenue, for which the firm identified a fraud risk.

Grant Thornton snagged a CFO Advisory principal with an impressive resume:

Grant Thornton today announced that Krystn Hammond has joined the firm as a CFO Advisory principal within the Advisory Services practice.

With more than 15 years of experience, Hammond has advised pharmaceutical and life sciences clients on transactions and tax restructurings, including acquisitions, divestitures, spin-offs and intellectual property migrations. Her experience spans across industry subsectors, such as big pharma, biotech, medical devices and diagnostics, generics, specialty, animal health, consumer and services.

Chipman69 will appreciate the quote she gave for the press release:

“I’m grateful to be part of a firm that sets exemplary standards in everything from client service to company culture,” said Hammond about her new role at Grant Thornton. “I look forward to working with a team of dynamic valuation professionals to help our life sciences clients make well-informed strategic decisions to add value to both patients and shareholders.”

Deloitte released the results of its 2024 Back-to-School Survey and says K-12 parents will be spending “cautiously” this upcoming school year:

• Back-to-school spending for K-12 students will likely remain flat, estimated to reach a collective $31.3 billion, or approximately $586 per student, according to those surveyed.
• Surveyed parents plan to decrease their spending on technology products by 11% year-over-year while increasing spend on other categories like personal hygiene and educational furniture by 22%. Spending on clothing and school supplies remains unchanged.
• Shoppers surveyed prioritize retailers offering value and convenience as mass merchants (77%) and online retailers (65%) are top destinations. In search of deals, parents plan to shop across 4.7 retail formats on average, up from 3.9 in 2023, and may sacrifice loyalty to stay within budget.

The new EY AI Pulse Survey asked 500 US senior leaders across industries about their AI technology investments, impacts and challenges. Here’s what they learned:

After more than a year of hype around generative AI’s potential, business leaders report that they are already seeing a return on their artificial intelligence (AI) investments and plan to increasingly become more bullish, according to new data from Ernst & Young LLP (EY US). Among the 95% of senior leaders who report that their organizations are currently investing in AI, the number of companies investing $10 million or more in the technology is set to nearly double next year to 30%, up from 16% currently investing at that level. However, despite the forecasted investment boom, the survey also found that many leaders are ignoring the foundational functions AI needs to thrive.

This contradicts the findings of Lucidworks’ Generative AI Global Benchmark Study released in June:

Who even knows. I’m convinced many of the CEOs and CFOs surveyed for these things have no idea what AI can really do, they just say they’re making investments in it to seem with it and cool. See this weekend discussion: Does Leadership Even Know What Gen AI Is?

And here’s World Economic Forum on young people and AI:

How young workers can thrive with AI when they have the right skills

For the young, the future is still unwritten. This reality can bring both excitement and uncertainty.

Today’s young people are entering the world of work at a defining moment, just as AI begins to transform it. This prospect may give rise to conflicting emotions. On the one hand, they might feel excited that AI can help them work more quickly and efficiently while making their jobs more enjoyable. On the other, they may be concerned that AI is reshaping the job market as they start their careers.

So, how is AI transforming the workplace – and how are young people navigating this shift? Recent research from PwC helps to shed new light on these questions. And the resulting insights confirm that while AI radically changes the world of work, young people who learn to harness it can open up enormous opportunities.

Moreover, young people appreciate the opportunities that AI brings to them and their careers, suggesting they can – and will – fully embrace its potential in the years to come.

Investor Place discusses three stocks that are sorry they used ‘sham audit mill’ BF Borgers:

• Trump Media & Technology Group (DJT): The embattled social media company hardly inspired confidence.
• SS Innovations (SSII): The BF Borgers scandal may upend the medical device company’s efforts to raise funds.
• Red Cat Holdings (RCAT): This small drone company isn’t ready to take off yet.

Related:

An Indianapolis CPA with one of those fancy .CPA domains from the AICPA went overboard on making clients happy:

An Indianapolis-based Certified Public Accountant (CPA) pleaded guilty in federal court to filing false tax returns for his clients and participating in an illegal tax shelter that cost the IRS millions.

Jason L. Crace, the founder of Crace.CPA, pleaded guilty in federal court on Wednesday to participating in an illegal tax shelter. He will be sentenced on Jan. 14, 2025, and faces up to three years in prison.

According to the United States Department of Justice, Crace helped clients in Mississippi and elsewhere file false business deductions for so-called “royalty payments” in the amount of millions of dollars between the years of 2013 and 2022.

The DOJ argued that Crace knew these “royalty payments” were circular flows of money purposely designed to give the appearance of genuine business expenses.

FedScoop talks about Direct File and how the IRS got it right:

The way Merici Vinton tells it, the first official user of the IRS’s Direct File pilot nearly had tears of joy in her eyes when she submitted her return to the free electronic filing program, a milestone for the tax agency and a potential game-changer for frustrated taxpayers across the country.

There was only one problem: a bad connection that resulted in that maiden filer’s return getting stuck in a queue.

“This would have been a failure,” said Vinton, deputy service owner for Direct File. “And not just a failure — our users wouldn’t have had trust in it.”

The reason it wasn’t a failure is that the Direct File team noticed the issue right away, resetting the connection to quickly free the return from its digital abyss. And thanks to a controlled rollout to only a limited cohort of volunteers and government employees, the system’s inauspicious start was a blip and not a death knell.

Earlier:

And that’s that. Should you have a tip or news story you think we should write about, reach out via email or text (anonymously) and I’ll be happy to take a look. Have a fantastic week, you deserve it. Later!

The post Monday Morning Accounting News Brief: Gen Z Shuns College For the Internet; A DYNAMIC Grant Thornton Hire; Tax Shelter Backfires | 7.15.24 appeared first on Going Concern.

Aprio (or the “Company”), a leading business advisory and accounting firm, today announced that it has received a strategic investment from Charlesbank Capital Partners (“Charlesbank”), a middle-market private investment firm with more than $18 billion of capital raised since inception, to accelerate innovation and growth of the business. The transaction represents the first investment of institutional capital into Aprio.

“As our profession continues to rapidly evolve, our partnership with Charlesbank is an important leap forward in our ability to bring state-of-the-art solutions to top business leaders, while making investments that will benefit our team, clients, and communities. We are building the business advisory firm of the future, and Charlesbank shares our vision and commitment,” said Richard Kopelman, CEO. “Aprio is poised to advance to the next level, and we are excited about the opportunity to best serve our clients and fast-track our growth with a widely respected partner.”

The terms of the transaction were not disclosed. If anyone cares to leak them, you know what to do.

Earlier:

The post It’s Official, Aprio Inked a Private Equity Deal appeared first on Going Concern.

Find something here to criticize, I dare you. Even the track they picked for this quick video tour is a banger.

This link from Architizer has a lot more info thanks to lead architect Dubuisson Architecture submitting tons of pics and tells you exactly what products were used where if you want to replicate the look at home because who wouldn’t. A few highlights:

The journey to the new campus started in 2016 when Deloitte chose this region out of 88 potential locations. A bit more background from the English version of the press release:

The location was selected against a range of sustainability, transportation, and accessibility criteria, as well as its proximity to the French capital. The facility meets high sustainability standards, notably through the use of sustainable materials and renewable
energy, as well as the installation of water and green spaces to promote biodiversity across the site. Built in BaillyRomainvilliers and in Magny-le-hongre, Seine-et-Marne, Deloitte University EMEA stands out as a large-scale and innovative project within an urban and economic hub.

The old DU EMEA joint was in Belgium and, well, sad compared to the new one:

And here I found one of the rejected designs for the new campus. Macfarlane+Associates envisioned “an educative orchard, a growing kitchen, sports pitches and various ecological habitats – meadows, woodland, lake, rain water gardens and swales with trails weaving through the different habitats” and said the circular design “was based on Deloitte University’s ethos of continuous learning and self-improvement, using circular geometries that represent movement, orbiting and reflection.”

Deloitte’s sure come a long way from breaking ground on the first DU in Westlake, Texas 15 years ago. Now we just have to ask…do they eat brisket in France?

The post Deloitte Ups Its Brainwashing Game in Europe and It’s Beautiful appeared first on Going Concern.

In the wake of Colorado firm and former Trump Media auditor BF Borgers being charged with “massive fraud” by the SEC in May, law firm Armstrong Teasdale has helpfully crafted some thought leadership aimed at those seeking audit services. The TLDR is don’t trust them, bro. The actual text can be found a few paragraphs down but first let’s catch you up on the story if you don’t know it.

Former Borgers clients were unceremoniously launched into the auditorless abyss by the quick shuttering of Borgers’ “sham audit mill” and there were so many of them that the SEC put out a notice aimed directly at these clients to remind them of all the stuff they are required to do upon finding out their auditor is trash. Losing your auditor at a time even larger audit firms are exiting the public company audit space completely is not a good time. Luckily for capital markets, most Borgers clients were small fry so their inconvenience didn’t exactly send 2008-level shockwaves through the economy.

But we aren’t talking small violations at Borgers here. It takes a lot to get “permanently closed” by regulators. Just look at Big 4 firms still happily chugging along despite racking up record fines over the years.

The lesson: Do your due diligence before choosing your audit firm, clients. Borgers’ reputation for shoddy drive-thru audits was known long before the SEC started typing out an order. Then again, maybe that’s why some clients chose them (not accusing anyone, just sayin’). Anyone seeking rubber stamp audits I guess can just ignore this advice and look for a firm that gets really pissed off at you if you start asking questions.

These are just a few basic questions Armstrong Teasdale encourages clients to ask potential auditors. Yes, it’s tedious. Yes, it’s a lot. Yes, they could still bullshit you.

• Basic Firm Information: What is the name and address of the firm, how long have they been in business, and how long have they been registered with the PCAOB? Are onsite client visits available? Does the firm have any references from its existing clients? Has the firm been involved in previous litigation brought by a client, and if so, how was it resolved?
• Organizational Information: What is the corporate structure of the firm? Are decisions made by a board of directors, officers or a management committee? Who conducts supervision over an audit engagement, and how is that review documented?
• Ownership and Leadership: Who are the individual owners, executives or managers of the audit firm? Do publicly available records reflect any risk concerns with respect to those individuals?
• Regulatory Oversight: Does the PCAOB have any records that reflect concerns with the firm? The PCAOB oversees audits of publicly traded companies and broker-dealers. The PCAOB inspects registered accounting firms, and portions of the inspection reports are publicly available. The registration application, annual reports and any disciplinary proceeding information are also available on PCAOB’s website. PCAOB status is also relevant to investment advisers in their SEC Rule 206(4)-2 obligations.
• Business Risks: Does the audit firm maintain written policies requiring it to comply with the PCAOB requirements? How often are those policies updated? Does it maintain audit documentation as required by PCAOB standards? Does it maintain an internal Code of Ethics, a business continuity plan or controls to maintain the privacy of client information?
• Audit Firm Engagement: Is the audit firm willing to respond to a due diligence questionnaire? Does the engagement letter with the auditor contain a limitation of liability in favor of the audit firm? Alternatively, does it provide that the audit firm will defend or indemnify the client against any losses caused by the audit firm’s services?

In recent years the PCAOB (that’s the Public Company Accounting Oversight Board for the plebs) has made it super easy to search inspection reports to dig up dirt on audit firms. It can be a little tough for people unfamiliar with the language of PCAOB inspection reports to parse what’s genuinely bad and what’s just PCAOB nitpicking but they do you a solid and put the deficiency rate for a particular year in the search results. Part I.A. Deficiencies are the bad ones on the PCAOB scale, “deficiencies that were of such significance that [the PCAOB believes] the firm, at the time it issued its audit report(s), had not obtained sufficient appropriate audit evidence to support its opinion(s) on the issuer’s financial statements and/or ICFR. 100% Part I.A. Deficiency Rate = couldn’t audit their way out of a paper bag. See:

A reasonable person could argue here (and probably will in the comments) that PCAOB deficiencies are often meaningless paper-pushing unless restatements and/or lawsuits get involved but let’s not confuse the clients OK?

For more tips on picking an auditor, see “Hiring a quality auditor: Your guide to the selection process” [PDF] from the AICPA.

The post PSA to Clients: Be Sure to Ask Your Auditor If They’ve Committed Egregious Standards Violations Before Signing That Engagement Letter appeared first on Going Concern.

I don’t expect there to be much news out there today, maybe the profession watercooler will surprise me.

I found out from Reddit over the weekend that AI is going to put both you and me out of a job. Redditors seem to know it all so I guess we should believe him.

EY’s Dan Black wrote something for Fast Company warning all of us in the workplace to get ready for Generation Alpha because they’re coming.

I can still vividly remember my first day at EY nearly 30 years ago. Back then, I was part of the young “new start class” that was so starkly different from the existing employees with our cutting-edge pagers and trendy single-breasted suits.

Reading this I know exactly what kind of haircut Dan had back then.

It’s hard to believe that Gen Alpha (born between 2010 and now) is set to begin entering the workforce in just six years, adding a new dimension to the multigenerational workforce. The arrival of Gen Alpha to the labor force will bring new technology, approaches to work, and expectations about the workplace that don’t yet exist. As a global recruiting leader, I’ve seen the shift firsthand. Today, younger workers are seeking careers that are flexible, personalized, and experience based.

Fortunately, the science and art of welcoming a new generation to the workplace is a practice that’s been happening since time immemorial. But companies should start preparing now for this new workforce dynamic.

Then he gives some actual advice so go read it. On your iPad, Gen Alpha-style.

Inc. wrote about how the CPA shortage is impacting startups and reminds us all that unassuming accountants are the guardians of the entire capitalist financial system as we know it. Without a fresh supply of them to keep watch, we’re boned. We might already be boned. Not sure yet. Actually, there were plenty of accountants standing around in 2008 and we survived that so, hey, it’s probably not so bad.

For many early-stage and smaller companies, accountants serve as de-facto financial advisers in place of a CFO, and right now, in a tricky environment of higher interest rates, elevated costs, and tighter margins, entrepreneurs could really use some professional guidance. But with depleted ranks, accounting firms are struggling to keep up with demand, and founders say they are struggling to get the answers they need.

“Small businesses are out there going: I need this help. It’s a tougher economy today,” says Ben Richmond, a certified public accountant who manages the U.S. client base for the small-business accounting software platform Xero. “The challenge is a lot of the firms aren’t either resourced with the right technology or enough people to get to that.”

For founders, regardless of whether they use a big four auditor, an independent firm, or an automated DIY solution, this headache will not affect tax season, says Richmond. “You’ll have no issue finding someone to do your tax return,” he explains. “But if you want the help of a true business partner or an advisor, that’s where there’s not as many firms out there,” he adds. “Firms are struggling to get through just the basic workload they have.”

On the topic of the accountant shortage wreaking havoc on capital markets, the Robert H. Smith School of Business at the University of Maryland published this:

The Accountant Shortage Highlights How Critical Accounting Is to Capital Markets

Last summer NPR’s Marketplace aired a story about the nationwide shortage of accountants. That caught the attention of Professor Rebecca Hann, Assistant Dean of Doctoral Programs and Dean’s Professor of Accounting at the University of Maryland’s Robert H. Smith School of Business. Intrigued by the report, she pondered, “How can we quantify the cost of an accountant shortage?”

This question led to the study entitled, “The Price of an Accountant Shortage: Evidence from Job Vacancy Duration and Internal Control Weaknesses.” The research co-authored by Hann, Smith PhD candidate Jingwen Yang and Yue Zheng, assistant professor at Hong Kong University of Science and Technology, reveals that prolonged accounting vacancies increase a company’s vulnerability to accounting errors, leading to weak internal controls over financial reporting.

“There’s growing evidence of firms struggling with late filings,” says Hann. The accountant shortage has left numerous companies unable to file their quarterly and annual financial statements on time. This highlights the critical role accountants play in ensuring timely and accurate financial reporting. When filings are delayed and accounting mistakes occur, it can jeopardize a firm’s ability to raise capital and maintain investor confidence.

Here’s a crazy idea coming out of Australia: tying pay to audit quality. With a touch of public shaming, something we’re always in favor of.

Audit firms should be publicly ranked and auditors’ compensation should be tied to the quality of their work rather than the amount of money they bring in, the Institute of Public Accountants says.

The IPA’s proposal, addressed to the Treasury, aims to address a culture among audit firms it said prioritised efficiency over effectiveness and created conflicts of interest.

“Economic fundamentals suggest that incentives drive behaviour,” the accounting body’s submission said. “If revenue generation drives compensation, then it may be given priority over conflicts of interest.”

The Treasury is considering reforms to the accounting and auditing sector, including splitting off audit services, in response to the PwC tax leaks scandal and the subsequent parliamentary inquiries that raised concerns with multidisciplinary firms’ audit practices.

We assume this means strictly upper-level auditor pay because let’s be honest, associates have zero individual responsibility for audit quality good or bad. Making their pay any worse will only make recruiting problems that much tougher.

I don’t think we’ve written a standalone story about this topic but we’ve been keeping an eye on the government of India’s desire to consolidate its 96,000 accounting firms into a few big ones that they think could compete with Big 4 on a global scale. Y’all didn’t think they were going to be content to do our busy work for peanuts forever, did you?

Anyway, here’s the latest on that:

The CA Institute has made two key decisions to create a supportive framework for the aggregation and expansion of CA firms, President Ranjeet Kumar Agarwal announced.

One of them is related to relaxation of the existing five-year demerger norm to a ten-year period. Earlier, firms going in for a merger can regain their legal names if they do a demerger within five years. After five years, they will lose the chance of getting back their old names.

This period is now extended to ten years.

The second decision is on allowing Limited Liability Partnership (LLP) to become a partner in another LLP. “By retaining the two firm identity intact, the two firms can still come together and work with combined strength to bid for projects and deliver. There will be combined resource and combined expertise,” Agarwal said.

We’ll continue to monitor developments. I don’t think anyone should be scared.

KPMG got a nice little write-up in Ad Age of all places. Well, it was an interview with KPMG CMO Lauren Boyman and it’s tagged as “Opinion.”

Here she talks about an AI-hosted podcast booth:

Have you developed customer-facing marketing initiatives?

One of the objectives that we had within marketing was to create AI-driven brand experiences. We wanted to share the art of the possible and enhance perceptions of KPMG.

We recently introduced KPMG Skylar—an AI-hosted podcast booth. We created this interactive AI experience to help our audience understand the power of what AI can do, and just how natural it can feel to interact with it.

The technology behind the experience uses a combination of AI services, starting with speech-to-text technology to recognize speech input, which is then passed through a series of generative AI prompts to ensure the response is safe before generating an AI response from Skylar. We launched Skylar at this year’s SXSW and since then, the experience has “gone on the road” to many events and sponsorships. It’s helped expand our brand perception in the AI space.

Found this guy tweeting about it:

KPMG presents ‘Skylar’ as part of our brand activation at #SXSW24 this weekend!

In addition to sponsoring, advising, and judging the SXSW24 Startup Pitch Competition this year, we’ve built a #GenAI-powered podcast experience where our host ‘Skylar’ will interview conference… pic.twitter.com/Wcdd9u1EBj

— Richard Entrup (@entrup) March 9, 2024

He really loves AI, you guys.

Fun fact, if you start typing ‘KPMG Sky—‘ into Google it suggests “KPMG scandal” instead. Perhaps because not much has been written about KPMG Skylar whereas scandals…

We done? Yeah, I think we’re done. As always, I’d appreciate it if you reach out should you come across any interesting stories we haven’t written about or have some dirt to share. Email is fine but text is best. Stay cool.

The post Monday Morning Accounting News Brief: Should Partner Pay Be Tied to Audit Quality?; Capital Markets Cry Out for Accountants | 7.8.24 appeared first on Going Concern.

Seeing that post reminded me that some months ago, we were informed of yet another — perhaps even superior — remix of IRS hold music that I never got around to posting. Seeing as it’s a holiday week and there’s little going on, there’s no time like the present.

Ladies and gentlemen, feast your ears on Jason Staats‘ IRS Hold Music but it’s lofi beats.

Oh, and here’s a completely related article The New York Times published a couple days ago: Millions of Taxpayers Call the IRS for Help. Two-Thirds Don’t Reach Anyone.

The post Here’s a Little Something For Anyone Who’s Missing the Sweet Sound of IRS Hold Music appeared first on Going Concern.

It was a given that Carmine, an enthusiastic promoter of the Project Everest plan to split audit and consulting practices, would probably make an exit after the much-hyped plan was shelved last April. What wasn’t known was who would slide in to take his place though Global Managing partner, Brit, and extreme Everest fanboy Andy Baldwin was considered a strong contender. This came as a shock to us as we expected him to shuffle off into the sunset or get shoved under the bus when Everest collapsed but no. Had he secured the role, he would have been the first non-American to lead the global firm.

“Andy is the favorite by a large margin, but things can get weird in a hurry,” said one person in the inside of the race to replace Carmine to Financial Times in August.

“The global executive [committee] has put the firm through the wringer and we need significant, maybe even wholesale, change,” said another to FT. “Andy needs to wear this debacle. He needs to be held accountable for pushing so hard and listening so little.”

“We need to reinstitute the ban on senior management retirement extensions that clog up the pipeline and hinder the development of future leaders,” said still another. 57 years old at the time, Baldwin griped about potential age discrimination were he to be passed up for the role. “Baldwin warned people involved in the selection process that UK discrimination laws bar taking age into consideration without a specific business reason, according to people familiar with the conversation. He was unhappy that age was considered so prominently in the process, they said,” wrote FT in a story about the leadership race published in November. Some people on the global executive committee expressed concern that Baldwin would reach mandatory retirement age of 60 before the end of the four-year CEO term. Plus they had a reason other than age to pass him by: the $500 million hole Everest burned in the global firm’s pocket.

Janet Truncale, meanwhile, is in her early 50s so she can squeeze out at least one term. In “Inside the race to lead EY after bungled break-up plan” (August 2023), FT threw her in toward the bottom as a highly unlikely contender:

Other mooted candidates included two Americans: Janet Truncale, who runs EY’s financial services business in the Americas, and Ryan Burke, who heads the firm’s practice serving private businesses. Truncale is seen as an ally of the global executive committee in its long-simmering tensions with other members of the US leadership, making it unclear if she could win Boland’s support, said several people familiar with the matter.

That’s then-EY US Chair Julie Boland, the person most likely to get thrown under the bus after Everest failed. See: EY Split Update: There’s a Battle Royale Going Down This Week. She was in support of the split as a concept but had concerns about the details and her dad was one of the many retirees holding up the split over concerns their pension payouts could be affected. See: Legal Liabilities and Pensions Are Holding Up the EY Split.

But none of that matters now. It’s a new era for the global EY organization and as of today, they have a new captain at the helm. Just days before her first official day she issued a proclamation that the ghost of Everest is to be exorcised from EY once and for all (sorry, Andy). At the same time, she introduced EY’s new catch phrase: All in.

Today we launched the new EY global strategy – All in – which sets out a bold ambition to create new value for EY clients, people and stakeholders.

All in is not just a business strategy, it captures an attitude and way of working – combining the multi-disciplinary skills of the 400,000 person strong EY workforce to anticipate and navigate a changing world – so that EY clients and EY people can shape the future with confidence.

Predictions for the next four years are welcome in the comments. Best of luck, Janet. And we don’t mean that in the assy “you’re inheriting a pile of hot garbage” way. We would have meant it that way if Baldwin got your spot though.

The post It’s the Dawn of a New Era at EY Today appeared first on Going Concern.

While Saturday’s post didn’t get many on-site comments, a pre-discussion tweet I posted related to the weekend discussion topic blew up on Twitter. You are invited to weigh in on either. Or neither. We’re low pressure over here.

Has anyone successfully negotiated a decent raise by coming to your employer with an offer from another firm and threatening to leave?

Heard a funny story today from a recruiter about that strategy backfiring pretty bad on a candidate. Will share later.

— Going Concern (@going_concern) June 28, 2024

CFO writes about how finance pros are rebranding career expectations and spoke to a real asswipe:

Finance and accounting, as lifelong, fulfilling careers, have a marketing problem. Contrary to what is taught in accounting programs across the country, the final stages of a career in finance and accounting aren’t only a life sentence on a partner track at a public accounting firm. Instead, the options that younger generations crave — entrepreneurship, impactful leadership, social media following and overall success — are all accessible in finance and accounting in a variety of interesting ways.

There are plenty of great potential business ideas that, for a variety of reasons, never come to fruition. However, Jeffrey Klimkowski, CFO and co-founder of DUDE Products, the brand that sells DUDE Wipes, left his high-paying dream job as an investment banker to build a business with his friends. Now as a CFO, he says the decision-making processes he gets to be a part of when it comes to business marketing spend are some of the best parts of his job.

The benevolent overlords of TurboTax and QuickBooks have released an accountant technology survey:

A new Intuit QuickBooks survey shows that while the accounting industry has felt the shockwaves of changing economic conditions, accounting professionals believe that failure to keep pace with technological advancements is the greatest risk to the industry — ahead of higher interest rates, the rising cost of goods, and widespread hiring challenges. These findings and more are highlighted in the 2024 Intuit QuickBooks Accountant Technology Survey, commissioned by Intuit.

The survey of 700 accountants in the US underscores the critical role of technology in meeting growing client expectations, addressing hiring shortages, and improving operational efficiency while maintaining a positive outlook on the industry’s future.

It’s probably going to be an excruciatingly slow week over here so we’ll dive into the survey results later this week.

I went to r/accounting to pull up some of the fire anti-private equity memes I’d seen over the weekend but instead I found these two posts sitting right next to each other in the “Hot” tab.

I actually cannot with our India team..
byu/wordup2u inAccounting

Why the fuck do we offshore shit
byu/One-Professional6229 inAccounting

The second is interesting as OP works in industry.

Why the fuck do we offshore shit

Why the fuck do we offshore shit

I’m working in industry – not even Big 4. My life is misery working with those fucking offshore teams. Every single time when we’re dealing with a local vendor, our managers decide for some goddamn reason, it’s a good idea for the team in India to send invoices or talk directly to them. Why the fuck do they think something like that is a good idea? And then when they fuck up, I catch the heat because I’m the one who’s meant to be babysitting them – never mind this is my first job right out of university and I can’t even take care of my own work. My managers end up having to step in and do shit on my behalf. Fml

Also – their dumbass deadlines for posting journals, the fact their timing is not aligned with ours, the fact they don’t stop and question things or even use critical thinking.

Reminder that in 2011, PwC was offshoring only 1-2% of its audit work with a goal to hit 20% by 2014. My how quickly things change.

WCVB in Boston celebrates Deloitte Impact Day. Nice enthusiasm, guys. You all look utterly thrilled.

The first several seconds are painful.

Business Insider on the AI consulting boom:

It’s possible to pose almost any question to artificial intelligence.

But when it comes to how to use the technology, many companies are directing their inquiries to consulting firms instead.

Doling out advice on AI is making up a growing share of many firms’ work. Some 900 of PwC’s top 1,000 consulting clients are now working with the firm on incorporating AI into their businesses, a spokesperson told Business Insider.

In 2023, McKinsey & Company brought in a record $16 billion in revenue, partly due to the generative AI boom. Almost 40% of the company’s work now relates to AI. And much of that is now moving to GenAI, Ben Ellencweig, a senior partner who leads alliances, acquisitions, and partnerships globally for McKinsey’s AI arm, QuantumBlack, told BI.

Boston Consulting Group, for its part, now generates a fifth of its revenue from AI, and much of that work involves advising clients on GenAI, a spokesperson told BI.

God I really hope this doesn’t end up like blockchain.

This guy from Bristol — a young, gay, an ambitious man (his words) — talks about his path to accounting and what he’d like to see more of when it comes to recruiting the next generation of number-crunchers:

Ben Steele is a certified chartered accountant with 17 years of practice. He specialises in cloud accounting, tech, and app integrations.

As the managing director of Streets Steele accountants, Ben steers the Bristol office and focuses on serving the hospitality industry, particularly food and beverage businesses.

Tell us about one (or more) of the people who inspired you along the way?

The original inspiration for my career came from my parents (I know…cheesy!) My Dad was one of the most ambitious and solid workers I know – creating anything and everything into a business. Despite being someone without an academic background, he knew how to create & grow a business, and connect with people.

My Mum showed me what it was to be fully committed to something, and strive for better, whilst staying loyal and grounded.

Then whilst training, I had a manager called Susan. She taught me what it was to be an Accountant. Her ethics and eye for detail were unwaivable. Not a single penny could be left unreconciled, and this strong approach accounting stuck with me – and I would like to think I pass this on to my team now.

Twenty people made partner at Withum:

“It’s my privilege to introduce Withum’s 2024 New Partner Class, said Pat Walsh, Managing Partner and CEO, in a press release. “We are celebrating these individuals for reaching a career milestone they have worked tirelessly toward. Each person on this list has exhibited a strong entrepreneurial spirit, dedication to their profession, and long-lasting grit that I am sure will propel them and our firm through many years of success. At Withum, our people are our greatest asset, and this new partner class is a testament to that belief. Congratulations to all of our new partners!”

You can see their names and service lines from Withum here.

Financial Times reminds us that today is Janet Truncale’s first day. Let’s wish her a good one.

On the business front, Janet Truncale becomes the new chair and chief executive of EY Global on Monday. She will be replacing Carmine Di Sibio who was the architect of the aborted Project Everest that tried to split the global firm’s accountancy and consulting arms. Another key participant in Project Everest was the head of EY’s UK operations Hywel Ball, who earlier this month announced his plans to step down.

I think that might be it for now. If you see something interesting, please pass it along! Comments, suggestions, complaints, and (my favorite) compliments are always welcome by email or you can text the tipline any time. Have a wonderful week!

The post Monday Morning Accounting News Brief: Offshoring Frustrations; Generative AI Generates Big Billable Hours | 7.1.24 appeared first on Going Concern.

Many months pass and now the candidate’s firm is bought by another firm. The culture is rapidly changing for the worse, people are getting PIP’d to death and laid off, and the survivors are anxious they’ll be next on the chopping block. So the job seeker reaches out to the recruiter and says she’s once again on the market. The recruiter contacts that other firm and says “Good news! That auditor you liked is looking to make an exit now.” “No thanks,” said the firm. “That bridge has been burned.”

As far as the firm was concerned, the job seeker pitted them up against the current firm and leveraged their interest in her to secure a raise.

The candidate is still on the market.

I’m positive we’ve written a lot about counteroffers over the years but all I could find in the archive after 20 seconds of Googling was this old Open Items post: Should I stay or should I go now? (Counter-offer). Sadly any comments made on that post were forever lost when we switched away from Disqus for comment management some years ago. Hope that person figured it out.

Thus, I’m posing the question to the audience now. Counteroffers: yea or nay? Anyone have good or bad experiences to share? Is there anything wrong with using other firms to force your current one into a generous counteroffer?

Oh and here, I found another old article: Counteroffers Rarely Work for Employees Jumping Ship. Same topic, different perspective.

The post Weekend Discussion: Let’s Talk Counteroffers appeared first on Going Concern.

To tide you over until we can do that deep dive, the good folks at TR just published an article on tax firms’ top strategic priorities. Talent continues to influence the obsessive thoughts that bubble over in firm leadership’s brains when they’re trying to fall asleep every night however growth, pricing, and efficiency are of significant importance, too. Depending on what size firm you ask.

Here’s a handy chart:

Says the full report:

• Small firms (1-3 people) tended to lean in the direction of maintaining the status quo, preferring a more balanced approach to prioritization.
• Midsize firms (4-29 people) were much more likely to pursue talent development as a priority and drive efficiencies through streamlined workflows and aggressive use of automation.
• Large firms (30-plus people) had the resources to pursue multiple priorities at once, including talent development and growth through efficiencies found using more sophisticated technology and automation. Large firms were also more likely to explore different pricing strategies for the broad range of business services they offer.

On the topic of pricing, Thomson Reuters says this is the first time ever it has appeared in the top priorities list. Ron Baker and the rest of the Death to the Billable Hour gang will love this part:

…largely because the wisdom of hourly billing is being questioned by both clients and their firms. Many clients don’t like hourly billing because it is unpredictable; hence the rise in flat-fee and project-based pricing, among other alternatives types of pricing. Firms, too, have come to realize that hourly billing doesn’t necessarily capture the true value of their services, particularly in the areas of business consultation, tax strategy, and decision support.

This makes a lot of sense when you think about how popular advisory services are these days. Don’t expect this change to happen as rapidly as automation, they’ve been debating this for like 15 years and the old-timers are really having trouble letting go. Here’s Ron Baker’s value pricing pitch from almost ten years ago:

A big problem with hourly billing is it’s an internally focused metric. It looks at our costs and our inputs. It doesn’t look at our outputs and outcomes. There’s nothing in the hourly billing formula that looks at client value.

The other problem with it is it limits an accounting firm’s income. As more and more firms are moving to the cloud, a lot of labor that CPAs used to do is now being automated. If you’ve got a business model that says, “I sell time,” and the time it takes you to do more work is being driven down because of all these technological changes, unless your hourly rates are increasing faster than productivity, your income is going to suffer, and your profitability is going to suffer. And our hourly rates have not been increasing faster than our productivity. So it’s a very limiting business model.

But back to the report. Comparing 2023 to 2024, we see efficiency still dominates the list, talent is once again a headache (note: retention is now the word of the day when we talk talent which should not be confused with the pipeline problems that get all the headlines), and growth has slipped a bit.

“Growth may have slipped down the priority list; but then again, lack of growth hasn’t been a problem for most firms either,” says the report. “Indeed, a majority of firms reported an average revenue increase of 24% over the past 12 months. So whatever firms are doing, it’s still working.” Mid-size firms interpret growth as expanding their client base while the larger firms see implementation of automation as the best way to grow. In other words, “growth” means different things to different-sized firms.

We’ll do a deeper dive into the report later, hopefully this has whet your appetite.

Survey Methodology:
Surveys for the 2024 State of Tax Professionals Report were conducted in the first quarter of 2024.* The survey involved 500 respondents from tax & accounting firms of all sizes, although a bit more than half (51%) of respondents were from midsize firms (4-29 people), and 38% were from small firms (1-3 people). By region, slightly more than half (51%) of respondents were from firms in the United States; the rest were from firms in the United Kingdom, Canada, Australia, Brazil, and Argentina. Also, 60% of the respondents were male, and the age range of all respondents was represented relatively equally by decade, from under 40 years old to over 60 years old. The vast majority (85%) of respondents reported having leadership roles in their organization, and almost half (48%) were either partners or principals.

The post Let’s Talk About This Year’s Strategic Priorities at Tax Firms appeared first on Going Concern.

As expected, the one-star reviews are hitting Google.

This particular testing center does appear on Prometric’s closure page. Extreme weather, natural disaster, power outages, technical issues, pandemic impacts or other circumstances are among the “unforeseen issues” that can lead to a closure. “We provide test takers with as much advance notice of upcoming site closures as possible,” says Prometric on their website. “We recognize in some cases there is limited opportunity to reach test takers well in advance.”

The obvious solution here is to find a new test center nearby but easier said than done sometimes (especially if this “chaos and hell at Prometric” rumor is at all accurate) and it’s ridiculous to give people 48 hours notice to do so.

6/24 Appointment Cancelled by Prometric
byu/Successful-Object-48 inCPA

Could be worse, you could be this person flying in from Ireland.

If anyone knows what happened, let us know.

Update 10.9.24: Prometric now says right on its site closures page in bold text what happened at 1250 Broadway. Not sure when they added this, we only happened to see it today while looking for hurricane closure info.

The testing center located at 1250 Broadway, Suite 2500, New York City is currently closed due to a burst pipe and the subsequent flooding and electrical damage it caused. We are working with building management to restore power and reopen as soon as possible; please check back or talk to your test sponsor for updates.

The nearest alternative testing centers are located at:

Brooklyn (4235/4236)
384 Bridge St.
4th Floor, Suite 4A
Brooklyn, New York 11201

Queens (4212/4213)
59-17 Junction Blvd
Suite 0202
Queens, New York 11368

Fairlawn (0033/4102/4252)
33-00 Broadway (RT 4)
Suite 205
Fairlawn, New Jersey 07410

The post Prometric is Canceling Exams in NYC With Very Little Notice and People Aren’t Happy [UPDATE] appeared first on Going Concern.

The IRS has dropped an Employee Retention Credit update. Update: Hella people were scammin’.

Following a detailed review to protect taxpayers and small businesses, the Internal Revenue Service today announced plans to deny tens of thousands of improper high-risk Employee Retention Credit claims while starting a new round of processing lower-risk claims to help eligible taxpayers.

“The completion of this review provided the IRS with new insight into risky Employee Retention Credit activity and confirmed widespread concerns about a large number of improper claims,” said IRS Commissioner Danny Werfel. “We will now use this information to deny billions of dollars in clearly improper claims and begin additional work to issue payments to help taxpayers without any red flags on their claims.”

“This is one of the most complex credits the IRS has administered, and we continue to ask taxpayers for patience as we unravel this complex process,” Werfel added. “Ultimately, this period will help us protect taxpayers against improper payouts that flooded the system and get checks to those truly eligible.”

The review involved months of digitizing information and analyzing data since last September to assess a group of more than 1 million Employee Retention Credit (ERC) claims representing more than $86 billion filed amid aggressive marketing last year.

During this process, the IRS identified between 10% and 20% of claims fall into what the agency has determined to be the highest-risk group, which show clear signs of being erroneous claims for the pandemic-era credit. Tens of thousands of these will be denied in the weeks ahead. This high-risk group includes filings with warning signals that clearly fall outside the guidelines established by Congress.

Earlier:

• The IRS Has Stopped Processing ERC Claims Because ERC Mills Are Scamming the F*ck Out of Them
• The IRS Is Ready to Strike the Fear of God Into Anyone Who Took ERC
• Tax Preparer Finds Out in the Worst Way Possible That ERC Wasn’t a Free Money Glitch

On June 14, Inc. published a story about ERC lawsuits:

These delays aren’t just hurting companies who sought them out, but also the tax advisory firms that have helped businesses fill out the necessary paperwork to obtain those credits with hopes of getting a piece of the pie as payment.

Such is the case for Jonathan Cardella, who runs Strike Tax, a tax advisory firm in Boise, Idaho. Cardella’s firm–which initially focused on advising businesses on how to tap into R&D tax credits–saw interest spike from businesses wanting to pursue the employee retention tax credit. Within a year, he says, ERCs went from a small portion of the business to a majority of it.

But Cardella claims that he’s missed out on $5 million in revenue he had banked on through uncollected fees, since businesses he advised have yet to receive their credit. As a result, Cardella says he has had to lay off 20 staff members. Cardella himself is unable to sue the IRS, since his business would not have directly received the tax credit. But that’s not stopping him from exploring legal action.

“We’re still hoping the IRS can do the right thing, but we’re sort of in a bit of limbo as we work to develop our first handful of plaintiffs,” he says. “As soon as I get my first client who has the chutzpah to do it, we’re going to file our first case.”

Fortune wrote about some troubles with Deloitte-managed state Medicaid services:

The systems have generated incorrect notices to Medicaid beneficiaries, sent their paperwork to the wrong addresses, and been frozen for hours at a time, according to findings in state audits, allegations and declarations in court documents, and interviews. It can take months to fix problems, according to court documents from a lawsuit in federal court in Tennessee, company documents, and state agencies. Meanwhile, America’s poorest residents pay the price.

Deloitte dominates this important slice of government business: Twenty-five states have awarded it eligibility systems contracts — with 53 million Medicaid enrollees in those states as of April 1, 2023, when the unwinding of pandemic protections began, according to the Centers for Medicare & Medicaid Services. Deloitte’s contracts are worth at least $5 billion, according to a KFF Health News review of government contracts, in which Deloitte commits to design, develop, implement, or operate state systems.

State officials work hand in glove with Deloitte behind closed doors to translate policy choices into computer code that forms the backbone of eligibility systems. When things go wrong, it can be difficult to know who’s at fault, according to attorneys, consumer advocates, and union workers. Sometimes it takes a lawsuit to pull back the curtain.

Australian telecom corp Telstra has broken up with EY after 25 years and hooked up with Deloitte. As to why…

Telstra, which revealed thousands of job cuts in late May to help it meet cost-cutting targets, confirmed on Monday it had chosen Deloitte to provide statutory auditing services from July. EY has audited Telstra’s books since 1999.

“After 25 years with EY, testing the market and choosing a new provider reflects our commitment to good governance. It will bring fresh perspectives and insights into our financial reporting processes,” a Telstra spokesman told The Australian Financial Review.

“With the rapid evolution of digital tools in the audit profession, we’ll also be exploring opportunities to improve our process and reduce our costs.”

…

Deloitte pitches “cloud-based, digital solutions” for auditing contracts, claiming it can reduce the time companies spend on manual tasks related to auditing.

Forvis Mazars has appointed two new audit and assurance partners in Switzerland. If anyone needs some free karma on r/justfuckmyshitup, have at it.

Raconteur profiled OnlyFans CFO Lee Taylor:

It was the desire to hold “an influential position at an interesting company” that led Lee Taylor to accept a job as chief financial officer at OnlyFans back in 2019.

…

Taylor’s path to the C-suite was unconventional. He ditched university at age 17 to pursue an accountancy apprenticeship. “My preference has always been to learn by doing,” he says. This early practical experience provided the opportunity to “learn by osmosis” and exposed him to how the finance function actually works within a business.

It also helped to shape his approach as his career progressed. “I’m always trying to view finance through all the different lenses within an organisation,” he adds.

Unsurprisingly, Taylor rejects the idea that one needs a university degree to enter the C-suite.

Indeed, an aversion to following the herd was in part what prompted him to leave his safe and predictable senior finance role at a listed company and accept an executive position at OnlyFans.

Related?

The new-ish CFO of the city of Columbus, Mississippi had to explain how audits work and why this mess isn’t his problem:

“Not good” and “not acceptable” are how Columbus Chief Financial Officer Jim Brigham describes the state of internal controls reflected in the city’s audit for Fiscal Year 2021.

“This does portray the status of internal controls in 2020, at the end of Fiscal Year 2021. And, you know what? It’s not good. It’s not acceptable. We don’t accept it, but I want to tell you also, that these things happened because you have to put people – these are technical issues – And, you have to put the right people in position to take care of it, and to babysit it, and to make sure it’s right, and that you can trust. And, some of it is trust, and some of it is compliance, and that’s why we have auditors come in and check our trust,” said Brigham.

Brigham was hired on in March 2022 and makes $100k a year. His predecessor was arrested for embezzlement.

And Vance County, North Carolina is learning the importance of internal controls:

The FBI is investigating the financial dealings of Vance County’s former finance director. County manager Renee Perry confirmed the investigation to WRAL.

Katherine Bigelow was terminated in February after Perry said she misrepresented her qualifications as a CPA, or certified public accountant.

A financial audit found that Bigelow wired more than one million dollars of county funds to a company that she was affiliated with.

“This action was able to go undetected for the time that it did due to a lack of understanding by the staff of the County in their assigned duties, and no cross-training of individuals who would have been able to provide oversight on the transactions,” said Thompson, Price, Scott, and Adams & Company auditors in their report.

“We finally started digging into why we weren’t getting the numbers we wanted…and the timeliness of the numbers…and the accuracy of the numbers. We began to dig into why weren’t the numbers reconciled, why weren’t they timely…which led to our discovery,” said the auditor at a Board of Commissioners meeting. “Our folks started going, ‘The answers she’s giving us are not what somebody in her position should be giving us.’”

Bigelow was fired in February.

A news outlet in Ghana discusses a 24/7 Big 4 busy season and witchcraft in the same article:

Two of Ghana’s biggest issues currently affecting progress are joblessness/unemployment and witchcraft (both foreign and local).

…

Anybody who has ever interned, worked or passed-through any of these accountancy firms would easily recognize the concept of a ’24 Hour Economy.’ In Ghana’s quest to solve the unemployment problem which is the single most depressing problem threatening to derail an entire generation of young adults and upending many families, the 24hr work cycle if successfully introduced and implemented would indeed be a game changer.

In principle, this concept which already exists in some industries like healthcare would be spread to other industries including Finance and Accountancy in the country just like their counterparts beyond the shores of Ghana have been running for decades.

Busy seasons, which could run anywhere from 6months to 9months for some and an entire 12months for others, is a period in the yearly life of a Big 4 employee where work never stops. In short, different people work at different times (shifts) continuously in a 24hr timeframe throughout the lifetime of a project. This is a period of tremendous hiring for many firms since as much hands as possible are needed to complete assignments. The burn out rate is so high during this period for various interns, independent contractors and consultants that compensation is exceptionally high. Some interns and consultants who make it through this period would get full time positions while others who may not necessarily enjoy the year-round experience of such tremendous workload would much prefer to be yearly seasonal hires using the time in between hires to either cool off or pursue other interest.

OK that’s it. As always, please get in touch if you have a tip or have seen a story you think the audience would find interesting. If email isn’t your thing, text the tipline (anonymously) at 202-505-8885 or hit us up on Twitter.

The post Monday Morning Accounting News Brief: Billions of ERC Claims Denied; On the OnlyFans Career Track; 24-Hour Busy Season?? | 6.24.24 appeared first on Going Concern.

Are y'all seeing this too?

I get this type of comment on my videos often. pic.twitter.com/NItQUjoA3W

— Logan Graf (@LoganGrafTax) June 23, 2024

Just going to leave this here.

Twitter thread.

The post Weekend Discussion: What, No Mention of the Long Hours? appeared first on Going Concern.

Let’s see some testimonials from last year’s uncorrupted youth:

CLA says more than 500 high school students applied which makes for an acceptance rate of about 13.8%.

“We are beyond excited to host this year’s summer interns to show the diverse array of career opportunities within accounting and professional services,” said CLA CEO and alternate CPA pathway fan Jen Leary. “At CLA, we are passionate about sharing what I and so many others at the firm love about the profession to inspire students to learn more. As we continue to grow, we see an enormous potential to disrupt the industry through the fresh thinking and technical savvy of tomorrow’s leaders. We learn so much from our interns and the students we meet through our connection with FBLA, those insights have been invaluable in helping us imagine and create a better future for accounting.” FBLA is Future Business Leaders of America, Inc. with whom CLA “joined forces” for this internship program.

Soooo…good luck, kids! We mean that in as non-sarcastic a way as possible.

If anyone from the 2023 class sees this and would like to share their experience with us (anonymously if you prefer), please get in touch.

The post Let’s Wish These 69 High School Students Good Luck as They Start a Summer Internship at a Top Ten Firm appeared first on Going Concern.

IPA published a whole thing about it that explains non-equity partnerships are a good way to keep people who may not be great at the hand-greasing of traditional equity partners and definitely not just a consolation prize for the awkwards.

The accounting profession is adding far more nonequity partners to its ranks than equity partners, which means power is concentrated among fewer owners but stand-out pros are getting the opportunity for more responsibility, more autonomy and more money.

To give a real example of how this approach is working in their article about this trend at Top 100 public accounting firms, they spoke to Pennsylvania’s Kreischer Miller.

OK you know what, who cares. Close enough for horseshoes. Writes IPA:

For example, at Kreischer Miller of Horsham, Pa. (FY23 net revenue of $42.3 million), the number of nonequity partners has increased from 12% to 59% of all partners since 2019. The numbers represent a shift in thinking, says Christopher Meshginpoosh, who goes by the title of managing director because partners are called directors at his firm.

At Kreischer Miller, equity directors are more involved in bringing in business than nonequity, but beyond that, there’s very little difference between the two. Both types serve clients the same way, sign reports, lead industry groups or service lines, and serve as thought leaders. Nonequity directors don’t vote, but there aren’t many issues that need to be voted on anyway, Meshginpoosh said.

The issue of non-equity partners appeared on our radar in earnest about ten years ago. See: Let’s Discuss: Non-Equity Partners in Accounting Firms. One figure thrown out in that 2015 article is a fact from CPA consultant and industry-leading Rosenberg Survey founder Marc Rosenberg:

Nearly half of multi-partner firms now have non-equity partners, almost double the number of 10 years ago.

So he’s saying in 2005 only about a quarter of multi-partner firms had non-equity partners, got it. Another item we learn from Marc is that prior to 2015, it wasn’t entirely clear that the AICPA Code of Conduct even allowed this practice. Despite the lack of clarity at that time, “firms by the thousands” were embracing the non-equity partner concept. No worries though, the AICPA revised the Code of Conduct on December 31, 2014 after which time it read:

Definition of a partner. A proprietor, shareholder, equity or non-equity partner…or any individual who is held out by the firm to be the equivalent of any of the aforementioned.

This conversation will probably be relevant as we move forward into the PE-owned future of public accounting, let’s shelve it for now and revisit later. Is the traditional CPA partner dead?

Accounting Firms Embrace Nonequity Partnerships: A Win-Win for Talent and Growth [INSIDE Public Accounting]

Related:

The post The Era of the Non-Equity Partner Is Upon Us appeared first on Going Concern.

And now, news that’s news as of today.

This morning, the IRS announced new steps to combat abusive use of partnerships:

As part of ongoing efforts to focus more attention on high-income compliance issues, the Internal Revenue Service announced today a new series of steps to combat abusive partnership transactions that allow wealthy taxpayers to avoid paying what they owe.

IRS compliance work continues to accelerate in this complex area of law following Inflation Reduction Act funding. As part of this, the agency is announcing a new dedicated group in the Office of Chief Counsel specifically focused on developing guidance on partnerships, including closing loopholes. The office will work closely with a new pass-through work group being established in the IRS Large Business and International division that will be formally established this fall.

The IRS and the Department of the Treasury today also issued three pieces of guidance focused on partnerships following discoveries by IRS audit teams. Currently, the IRS has tens of billions of dollars of deductions claimed in these transactions under audit.

The new guidance is designed to stop the use of “basis shifting” transactions that use related-party partnerships to avoid taxes. In these complex moves, high-income taxpayers and corporations strip basis from assets they own where the basis is not generating tax benefits and then move the basis to assets they own where it will generate tax benefits without causing any meaningful change to the economics of their businesses. These basis shifting transactions allow closely related parties to avoid taxes.

Treasury estimates these abusive transactions, which cut across a wide variety of industries and individuals, could potentially cost taxpayers more than $50 billion over a 10-year period.

ProPublica did a story on “how remote work and artificial intelligence are ushering in new kinds of fraud in state and local governments” and interviewed Washington state auditor Brandi Pritchard. Municipal collapse, LET’S GO:

What’s the most shocking fraud you’ve ever run across?

Pierce County Housing Authority comes to mind. As far as we can tell, it’s the largest government misappropriation [by an employee] in Washington state’s history. And considering who the users of that particular district are, low-income folks needing housing assistance, that makes it even more staggering.

But on the fraud-nerdy side of things, it’s a wonderful case study. The way our auditor used professional skepticism was absolutely magnificent, in that she wasn’t just paying attention to the physical pieces of paper in front of her. She was capturing the environment, the culture there, and it felt off to her. The way our subject treated her staff compared to the way she treated the auditors felt off. So by the time the auditor looked at that bank statement and saw that weird wire to some title company, she was on high alert.

The Montgomery Advertiser of Alabama profiled an accountant stimulating her community both economically and charitably:

When Melissa Wood, accountant and entrepreneur, opened her accounting firm in Elba nine years ago she didn’t realize how much she would add to the town she describes as a close and genuine community.

More recently, Wood began an effort to help foster families in Elba and surrounding areas as she saw an unmet need. A relationship she developed with a foster parent and child opened her eyes to the need for support that foster families have for items like clothes, food, bedding and school supplies.

To answer that need she founded Fostering Angels. She applied for non-profit status in January, with the official ribbon-cutting held on May 18 in the former Bradley Florist space at 1951 Hickman Ave.

“We have already serviced 35-40 kids in the short time that we have been open,” Wood said.

And for an accountant allegedly behaving badly, let’s head to Thailand:

A woman accountant in Phuket has been apprehended by officers from the Central Investigation Bureau (CIB) on charges linked to multiple call centre scams. Identified only as Kanraya, the alleged scammer has been implicated in five separate arrest warrants for her involvement in fraudulent activities, including opening bank accounts used by scam gangs.

The investigation revealed that Kanraya used her bank account to receive money obtained through various fraudulent schemes. These included impersonating a police officer, deceiving victims into transferring money for verification, and tricking people into investing in online product sales with promises of high returns.

Kanraya denies the allegations.

Karen, you will never work in this town again! Compliance Week on a CFO behaving badly:

The SEC received a final judgment Friday in its case against former Synchronoss Technologies CFO Karen Rosenberger, filed in U.S. District Court for the Southern District of New York, the agency said in an administrative proceeding.

The details: In its complaint, the SEC alleged that Rosenberger engaged in accounting misconduct which overstated Synchronoss’ revenue in false financial statements, which allowed the company to meet revenue expectations it otherwise would not have met. The false statements related to five total transactions, including two with one of the company’s largest customers, and another related to Synchronoss’ acquisition of another company, the SEC said.

Per the SEC, she also “sought to cover up her and Synchronoss’s misconduct by lying to Synchronoss’s auditor in connection with those transactions, falsifying books and records, and by failing to implement or maintain, and circumventing, Synchronoss’s system of accounting controls.”

Two EY partners, Alison G. Yablonowitz, CPA and Shawn C. Rogers, CPA, were hand-slapped, browbeaten, and pilloried by the PCAOB in 2021 for their work on this client. Yablonowitz was engagement partner on the 2014 and 2015 audits of Synchronoss, Rogers stepped up to bat in 2016. According to the PCAOB order [PDF], Synchronoss said “trust me, bro” and EY was like “OK.”

In each of the transactions, Synchronoss licensed software technology to an entity—in exchange for a license fee—around the same time it was negotiating a strategic transaction (i.e., an acquisition, business venture, or divestiture) with that same entity or one or more of its affiliates. In each instance, Synchronoss incorrectly accounted for the license transaction as separate from the strategic transaction and improperly recognized the license payment as revenue.

With respect to these transactions, Respondents failed to adequately evaluate (a) Synchronoss’s accounting treatment of the license transaction as separate from the related strategic transaction and (b) the factors specified in the PCAOB’s fraud consideration standard with respect to significant unusual transactions. Moreover, Respondents failed to adequately resolve inconsistencies in audit evidence and investigate instances in which evidence contradicted management representations, and instead relied on uncorroborated management representations. In doing so, Respondents failed, among other things, to exercise due care and professional skepticism, and to obtain sufficient appropriate audit evidence to support EY’s audit opinions for the 2014-2016 Audits.

Forvis Mazars’ Phil Laminack talks about Pillar Two accounting for Bloomberg Tax:

As countries around the world adopt legislation to implement the 15% global minimum tax known as Pillar Two, tax accounting will become even more complex.

A country’s legislation will greatly affect multinational companies and pose numerous pitfalls based on sheer complexity and volume. Proactive planning and analysis will avoid problems down the road.

He gives some advice after that. Obviously.

Deloitte Australia is rolling out a new AI tool that supposedly makes working there more tolerable.

The news: Deloitte Australia will begin rolling out its new artificial intelligence platform MyAssist across its workforce after more than a year of development, as part of its strategy to become an “AI-fueled organisation”.

The numbers: The audit and consulting group will roll out MyAssist to its entire workforce of 13,000 from Monday.

Deloitte said that a trial of around 1,300 users found that a core set of common tasks can account for up to 50% of the work time of some users, and it is these tasks that the MyAssist platform has been optimised to support. As part of this trial, 70% of users reported the new platform “meaningfully improved” overall work productivity and 65% reported an improvement in work quality.

Meanwhile, Aussie KPMG did their own AI rollout to tax staff:

The firm describes [custom-built] KymTax as a combination of a research tool, knowledge management platform and content generator, designed to put the full breadth of KPMG’s proprietary tax knowledge at the easy reach of its practitioners.

The idea was conceived during an internal brainstorming challenge which aimed to uncover the most appropriate generative AI use cases within the firm, and is believed to be one of the first such applications globally for tax services.

And KPMG Canada is “expanding use of AI to boost efficiency and productivity“:

KPMG Canada says it has been investing in generative artificial intelligence (GenAI) proprietary tools, training, and solutions to enhance the work of its 10,000 professionals.

“At KPMG in Canada we’ve been experimenting, piloting, and implementing AI across the firm for some time,” Stephanie Terrill, AI executive leader and head of the management consulting practice, said in a press release on Wednesday. “And in some ways, we consider ourselves ‘client zero,’ which means we’re testing and piloting new generative AI solutions and sharing that expertise with clients by helping them implement their own AI solutions to solve a variety of business problems. It’s an exciting time to be innovating internally and with clients.”

ALM Treasury & Risk offers some advice for controllers who don’t want to get in trouble for bad financial statements:

Almost six out of every 10 accountants report making several errors every month, and one out of three says they make a few errors each week. These alarming statistics come from a July 2023 survey of 497 accountants conducted by Gartner research. The survey also found that the error rate among accountants is highly correlated with the extent to which their controllers report capacity constraints.

Obviously, financial errors can have tangible business consequences. If errors make their way into the monthly or quarterly close, business decisions may be based on incorrect data. Worse, the organization may issue inaccurate financial statements, opening itself up to an array of potential regulatory and investor relations challenges down the road.

Corporate controllers frequently seek to increase capacity by deploying new technologies in hopes of reducing errors. But so far, this approach has had mixed results. Many controllers have told us that their staff keeps doing manual work long after it is no longer needed.

INSIDE Public Accounting talks about firms embracing non-equity partnerships. “A win-win for talent and growth,” they said.

The accounting profession is adding far more nonequity partners to its ranks than equity partners, which means power is concentrated among fewer owners but stand-out pros are getting the opportunity for more responsibility, more autonomy and more money.

It’s a trend that’s remained solid for at least the last 15 years. According to the 2023 IPA Practice Management Survey, the number of nonequity partners among the IPA 100 (excluding the Big 4) has increased by more than 320% over the last 15 years versus just 85% for equity partners. The IPA 100 in 2023 included firms above $48.8 million in net revenue. The data also shows the practice has accelerated over the last five years.

The only thing holding back some “phenomenal” performers from becoming directors was business development experience. There’s room for both. “If we can get an outstanding business developer surrounded by people who can help them on the delivery front, make them more efficient and free up time for them to go out and make it rain even more, then that’s a really good answer for the firm.”

A Georgia accounting firm will be raising money to fund childhood cancer research this week:

The BRD Valdosta staff will run a lemonade stand for charity on Tuesday and Wednesday.

Stop by the office at 3006 N. Patterson St. from 11 a.m. to 2 p.m. each day to get a glass of lemonade for a donation to Alex’s Lemonade Stand Foundation for Childhood Cancer.

“Working at an old-school lemonade stand is a fun way to raise money for a worthy cause,” said CPA Janine Pendleton, the BRD branch manager. “Besides, it’s hot outside, and who doesn’t love lemonade?”

Alex’s Lemonade Stand says it is the largest independent childhood cancer charity in the U.S. and has raised more than $300 million since 2005.

Two firms in Pennsylvania you’ve never heard of have merged:

RKL LLP continues its expansion with a merger with Lancaster-based Kauffman CPA Company, effective July 1.

RKL said in a release the merger will add further expertise to RKL Virtual Management Solutions’ spectrum of outsourced accounting, financial management, human resources and payroll services.

Approximately 15 Kauffman CPA Company team members, including Doug Kauffman and other key leaders, will join RKL’s nationwide team of over 650 professionals and will be based out of the Lancaster office

That was a surprising amount of news for a Monday in June! Always nice so I don’t have to work too hard.

Comments are off by default on news briefs but give me a shout if you have a comment, see something interesting, have a tip for us, or just need to vent: email | text. Find us on Twitter here. Oh and subscribe to the newsletter for the Accounting News Roundup by email every Tuesday and Friday. Byyyyeee.

The post Monday Morning Accounting News Brief: Heads Up, the IRS Is Scrutinizing Partnerships; | 6.17.24 appeared first on Going Concern.

The natives are restless pic.twitter.com/F21X8uzzI3

— Going Concern (@going_concern) June 12, 2024

Lifted from Reddit here.

This isn’t about one particular firm — though individual firms are doing a great job shattering trust among their own people in recent weeks (see: PwC, GT) — rather, it’s about how all of this looks to students, people in the first few years of their career, and the public. For a profession that’s supposedly super stable even in economic downturns, things sure aren’t looking very stable right now.

Something else of interest I saw on Twitter:

More thoughts on Private Equity (PE) and Public Accounting firms.

The Grant Thorton private equity (PE) deal closed on 5/31/2024. New Mountain Capital LLC is the PE firm.

As usual, the auditing practice was spun off.

Prior to purchase, Grant Thorton was the 7th largest…

— Mike Sylvester, CPA (@MikeSyl36625988) June 14, 2024

Why does it feel like something really bad is about to happen?

The post Weekend Discussion: Fear and Loathing in Public Accounting appeared first on Going Concern.

• The Firm Leadership portion of the survey is designed for completion by one person for each accounting and consulting firm — usually the Managing Partner or a top HR professional. Those leaders are asked to provide information about their firm’s remote and flex work practices.
• The Team Member survey is open to anyone currently working in an accounting and consulting firm and multiple team member responses per firm are welcome.

On the individual team member side, your confidential responses can be useful intel for firms, particularly the ones open to improving the state of their firm based on feedback from people working in the trenches. Now’s your chance to sound off on what’s working and what isn’t from behind the safety of aggregated data.

Here’s the pitch:

We believe the combination of firm-level data and team member insights will provide firms with a unique opportunity to impact the mindset and strategic direction of firm leaders in our profession. Given how important the talent pipeline is to the success of accounting overall, hearing team members’ thoughts on these important cultural elements and flex and remote benefits is a must.

Participation in the ATAWW Survey allows firm leaders to benchmark their current flex and remote offerings against other accounting and consulting firms of all sizes around the country. Survey participants will have access to the full survey report which includes an executive summary, detailed reporting on survey results, and best practices and strategies to drive successful adoption of remote and flexible work practices. Non-participants will have easy download access to the executive summary at no cost or can purchase the full survey report.

We’ll also share a quick overview when results come out in November if you prefer to wait for the CliffsNotes.

Get more info and find a link to the survey here.

The post Hey, Take This Survey appeared first on Going Concern.

According to a press release they put out yesterday, EY plans to invest a billion dollars over three years on talent and technology “to revolutionize the experience of early career accounting professionals and improve the attractiveness of the profession.” Let’s see what exactly they think that looks like:

This investment includes a significant increase in early career compensation, artificial intelligence (AI)-enabled audit and tax platforms, an innovative new “360 Careers” experience, outreach and support for college students, and enhanced wellbeing benefits.

Call us skeptical but this sounds like a lot of non-compensation stuff that could eat up a healthy chunk of that billion bucks. They did say the salary bump will put accounting “on par with other business majors” though:

EY US will increase early career compensation as part of a total rewards package that recognizes the value of a certified public accountant (CPA) career path. This investment will place the profession and accounting degree on par with other business majors and position EY US as a pay leader in an increasingly competitive US market.

No salary number was given so we’ll just have to keep an eye on the next few compensation seasons to find out just how much more they’re paying.

Added the firm:

EY US will continue to be a beacon for top talent, supporting professionals as they pursue a degree in Accounting and as they progress in their career, through:

• Pathways to CPA licensure, including the EY Career Path Accelerator, to remove barriers to entry and create a growing pool of future CPAs
• New EY 360 Careers experience for early career professionals starting in 2025, which will serve as a launch pad and accelerator to give campus recruits the essential skills they need to grow as leaders at the global EY organization, forge their paths as entrepreneurs or advance to prominent C-suite positions later in their careers
• Wellbeing enhancements to help professionals perform at their best, including dedicated coaching and wellbeing assistance for audit and tax teams during periods of peak performance

If you didn’t know, EY Career Path Accelerator is “an accessible, affordable, and relevant alternative for students to meet the 150 hours of education required for CPA licensure” meant for people who aren’t on the Master’s track. This is what’s currently on offer:

Says EY about the program, the Career Path Accelerator “offers hands-on learning through our EY internship, ensures participants receive the guidance they need to be successful, and equips students with the future-focused skills and subject-matter experience that they’ll need upon entering the workforce.” The program is administered by Hult International Business School.

Let’s wrap this up with the expected quote:

“Investors and global capital markets depend on a thriving accounting profession,” said Ginnie Carlier, EY Americas Vice Chair – Talent. “Our goal is to make EY US the most preferred place to launch an audit or tax career and become a springboard for future business leaders – for our own organization and leading public and private enterprises.”

EY US to invest $1 billion in compensation and technology to improve the attractiveness of the accounting profession [PR Newswire]

The post EY Promises to Increase Starting Salaries to Make Accounting More Attractive appeared first on Going Concern.

He also discussed hiring, saying they’ve been seeing a slowdown in hiring across the board (he means outside of the firm), “particularly in professional services” (so, in the firm). He then talks about how consulting firms, including EY, have begun pushing back new hire start dates due to the state of the economy. “It really has nothing to do with ChatGPT…YET,” he said. “It has to do with the fact that many companies were hiring based on attrition rates that were much higher a year ago, a year and a half ago post-Covid, you know, people were leaving, The Great Resignation. Those attrition rates, for example for ourselves, went from 20, over 20 percent, down to 12, pretty suddenly.” This tracks with everything we’ve been hearing surrounding layoffs and layoffs-that-aren’t-layoffs (a.k.a. Death by PIP), firms are seeing much lower attrition rates than they budgeted for AND a slowdown in client demand, leading to cuts.

“So therefore a lot of companies, including ourselves, have found ourselves with more people than we need at this point in time,” he continued.

It was around this time that firms started launching soft return-to-office guidance (not to be confused with hard return-to-office mandates) to which many said “if they require in-office, I’ll quit!” Well, sure. That’s what they want. They knew you’d quit. See: In Shocking Blow to Pro-Office Leadership, People Will Quit If You Force Them Back Into the Office about a Deloitte financial services survey that indicated 66 percent of FSI leaders would quit if their company required them to return to the office five days a week.

Now a new survey from BambooHR confirms what we all suspected: executives and HR managers used RTO to pump those turnover numbers up. At least among the 1,504 full-time salaried employees — including 504 HR professionals with a manager title or above — surveyed.

Nearly two in five (37%) managers, directors, and executives believe their organization enacted layoffs in the last year because fewer employees than they expected quit during their RTO. And their beliefs are well-founded: One in four (25%) VP and C-suite executives and one in five (18%) HR pros admit they hoped for some voluntary turnover during an RTO.

Bad news for them though:

By using RTO mandates as a workforce reduction tactic, companies are losing talent and morale among their employees. Nearly half (45%) of the employees who have experienced RTO report significant talent loss within their organizations—talent that was highly valued and wished to be retained.

Moreover, the discontent with return to office policies is strong among employees, with more than one in four (28%) stating they would consider leaving their positions if subjected to such mandates. This level of dissatisfaction could lead to a further drain of talent, affecting not just morale but also the stability and innovation potential of the workforce.

So the obvious problem here is that unlike targeted layoffs, RTO mandates don’t put only the unwanted castoffs out to pasture but also risk the talent companies want to keep. But duh, they should have known that would happen too.

There’s more in the survey if you want to check it out:

THE NEW SURVEILLANCE ERA: Visibility Beats Productivity for RTO & Remote

The post Survey Confirms What We Already Knew: RTO Mandates Were Intended to Get People to Quit appeared first on Going Concern.

The weekend discussion was about tight-ass firms in Madison offering $15/hr. nO oNe WaNtS tO wOrK!

Cheap firms aren’t news though. Here’s some actual news.

Financial Times dropped a bomb the other day: PwC asks for silence from departing staff in program of UK job cuts

PwC has launched a round of “silent lay-offs” in the UK, with affected staff told they must not inform colleagues why they are leaving and have to follow a “suggested wording” if they want to send goodbye messages.

In guidance sent to affected employees, reviewed by the FT, PwC said: “Should you decide to accept this voluntary offer, it is possible for you to send out a note to a defined group, however this must not refer to the voluntary severance offer or the circumstances of leaving (suggested wording for this note is given below but we recognise that you will naturally want to personalise this).

“Naturally, it must also not be derogatory to PwC or its employees/partners. It is down to business discretion as to when this message can be sent out and if the business wishes to review messages before they are sent out.”

The balls on this firm!

If it makes you feel any better, they’re still getting shit on by the Australian press. Here’s Sydney Morning Herald:

The tax office brawl that almost ended investigation of PwC scandal

The Senate committee that uncovered the PwC tax scandal is due to release its final report this Wednesday, but it will not end the fallout that has already torn the consulting firm in two and sent shockwaves throughout the entire industry.

The tax office now faces fresh scrutiny over allegations it actively attempted to derail the investigation that led to former PwC partner Peter Collins being banned in 2022 for sharing sensitive government tax plans with other partners and potential clients.

The scale of the scandal was revealed in May last year when the Senate committee released a cache of emails revealing the brazen attempt to use confidential government tax plans to cultivate fresh business from notorious corporate tax avoiders like Google and Facebook. This was triggered by queries from Senator Deborah O’Neill.

Fresh concerns were raised last month when government agencies, including the Australian Tax Office (ATO), replied to questions on notice from Senator Barbara Pocock.

It confirmed there was a barrage of actions targeting the Tax Practitioners Board (TPB) and its chief executive, Michael O’Neill, which discovered the damning evidence that was made public via the Senate committee.

Here’s something from the tip box:

Hearing about delayed start dates at BDO

— Going Concern (@going_concern) June 7, 2024

Last year around this time: Rise Up! BDO USA Is Gonna Double Its Offshore Workforce, Mostly in India

If you have more info, please text or email (tipsters are always anonymous).

Another auditor just gives up on a municipal-adjacent client. This one is Central Basin Water District which serves the southern part of Los Angeles County. They’ve been having some…issues.

An accounting firm hired to audit Central Basin Municipal Water District’s fiscal records threw in the towel last week, claiming it could not finish the job because missing records and “ongoing mismanagement” had undermined the review’s integrity.

In a June 3 resignation letter, Managing Partner Sanwar Harshwal stated auditors “encountered significant internal control deficiencies that demand immediate attention.”

“We have dedicated our efforts to rectify these deficiencies, but their persistence raises significant concerns regarding the reliability and accuracy of the financial information provided to us,” Managing Partner Sanwar Harshwal wrote. “Additionally, the challenges associated with incomplete and insufficient information have obstructed our ability to conduct a thorough and comprehensive audit.”

See also this April 2023 Los Angeles Times piece: ‘Take a seat, bro’; Embattled water agency muzzled critic at public meeting, ACLU says

Meanwhile, in Columbus, Missouri:

The city of Columbus’ delayed audit report for Fiscal Year 2021 is on its way, and the FY2022 report is expected by September.

During the city council’s Tuesday meeting, Accountant Wanda Holley with Watkins, Ward and Stafford – an outside accounting firm that is preparing the city’s audits – told the council the FY2021 report should be ready by the council’s June 18 meeting.

Meanwhile, Chief Financial Officer Jim Brigham said the firm is finishing collecting documents from the city for FY2022 by the end of the month. Brigham said the 2022 report should be available by the end of this fiscal year.

Brigham said the delays in the annual audits were caused by a few things, including previous embezzlement and weak bookkeeping.

In 2020, former city CFO Milton Rawle was arrested on charges of embezzling $288,000 from the city between 2016 to 2018. The missing funds were revealed by the FY2018 audit report.

I’m going to repeat something I’ve been saying for like a year and a half now: there is a big shitstorm brewing in municipalities of all sizes and we are not prepared. A lot of them blame Covid (or the client: EY Gave a Hilarious Excuse For Walking Away From This Awful Municipal Audit Client) but when you put aside the usual government inefficiency, poor bookkeeping, and embezzling, what you have is solid evidence that the accountant shortage is eating away cities from the inside.

It’s going to get much worse.

Deloitte is getting hyped about the Olympics and the International Olympic Committee wrote about it.

What do you think Deloitte can bring to the Olympic Movement?

John Skowron Deloitte’s Vice-Chair for the Olympic and Paralympic Games: “When I think of the IOC’s mission of building a better world through sport, I think about all that that entails. It’s a force for good. It’s a force for inclusion. It’s a force for gender equality in sports. Those characteristics align well to our firm and Deloitte. Being able to bring our capabilities to the Olympic Movement to help support that mission is very exciting to us.”

A video:

EY has appointed a new global Independent Non-Executive and he’s a PCAOB alum.

Today EY announced the appointment of a new EY Global Independent Non-Executive (INE), Duane M. DesParte, who will join the EY Global Governance Council (GGC), effective 1 June 2024.

Duane is a former Board Member of the Public Company Accounting Oversight Board (PCAOB), to which he was appointed by the Securities and Exchange Commission in December 2017, and on which he served through the conclusion of his second term in October 2023. He served as Acting Chair of the PCAOB from June 2021 to January 2022. While at the PCAOB, Duane served as an Officer of the International Forum of Independent Audit Regulators (IFIAR) for four years, including a term as Chair that ended in April 2023.

The GGC advises the EY Global Executive on policies, strategies, and the public interest aspects of its decision-making. The participation of INEs on the GGC plays an essential role in providing diverse perspectives in order to enhance the EY contribution to the stability of capital markets through audit and other services.

KPMG Canada offers ‘The CEO’s guide to AI strategy‘:

CEOs should keep in mind that generative AI isn’t just about personal productivity—such as drafting emails and creating presentations—though that’s where it gets the most attention. Productivity with AI is also about identifying efficiencies for core businesses operations, like machinery, equipment, systems, and resources. In other words, it’s not just about the productivity of people, but the productivity of an organization’s other assets across the entire value chain.

For example, an insurance company might build generative AI into claims processing to reduce fraud, while a manufacturer might use generative AI-enhanced predictive maintenance to boost the life span of equipment and reduce unplanned downtime. At KPMG, we’re building generative AI into our audit methodology to further de-risk audits—such as performing automated matching of cash to revenue using data from client accounting systems—which enhances our overall productivity.

Federal News Network talks about what House GOP is up to:

House Republicans are proposing defunding the IRS’ Direct File platform, which allows households to file their federal tax returns online and for free.

But the House Appropriations Committee released a fiscal 2025 spending bill this week that would cut IRS funding by nearly 18% and zero out funding for Direct File.

The FY 2025 fiscal services and general government appropriations bill would give the IRS a $10.11 billion budget — a $2.2 billion cut from current spending levels. The cuts would be felt mostly by IRS enforcement, which would see a $2 billion cut in funding.

Earlier: The IRS Says F*** You to TurboTax and Makes Direct File a Forever Thing

Looks like that’s all I’ve got for now. As always, I implore you to get in touch if you spot something newsworthy, have inside scoop, or just want to gripe. I don’t mind. Email me directly or hit the tipline at 202-505-8885.

Have a great week, you.

The post Monday Morning Accounting News Brief: PwC Does Something Exceptionally Grimy; PCAOB Alum Heads to EY | 6.10.24 appeared first on Going Concern.

Seeing postings from other local CPA firms paying their employees $15-20 an hour for an accountant. Crazy.

— TailorCPA (@tailor_hartman) June 6, 2024

The tweeter, who is not the jackass, lives in Madison, WI (GO BADGERS!). Here is a handy living wage chart for that area.

You’d be better off pushing carts at Target.

The post Weekend Discussion: You, Sir or Ma’am, Are a Jackass appeared first on Going Concern.

The first day of Pride fell on a Saturday this year so naturally we assumed it would be someone’s job to quickly log in over the weekend and swap in the rainbow logo. Logos that already exist so it’s not like someone is having to build them from scratch after hours, we’re talking a five minute job. Still, it was worthy of a lol working on the weekend at Big 4 amirite joke.

Someone's gonna be working on Saturday switching in those rainbow profile pics pic.twitter.com/KCPawE2G5W

— Going Concern (@going_concern) May 30, 2024

Two or three years back, on a very slow day in June, I was going to put it to the audience to vote which Big 4 firm has the best rainbow-clad logo (personally I prefer KPMG’s rainbow vape thing, it feels the least hamfisted in there) but never published the article because halfway through I realized it was stupid (I have this realization far more often than you’d think). This image conveniently still exists due to that abandoned article. This is what their profile pictures should look like right about now:

And this is what they looked like on Monday:

OK so maybe three of the firms, in uncharacteristic consideration for the sanctity of their employees’ weekends, decided not to make the guardians of Twitter change the profile pics on Saturday. Or Sunday. Or Monday.

It’s now Thursday and everyone but PwC is still the same. Deloitte did change the @lifeatdeloitte one but the main accounts — @deloitte and @deloitteus — are the same.

It appears every Deloitte regional is unchanged except for those happy folks in Belgium:

KPMG:

KPMG India’s account along with KPMG UK and KPMG UK’s recruiting account all have rainbows. And of course KPMG Belgium because Belgium is apparently the proudest country as I’m learning from putting together this article.

EY:

A small handful of specialized EY accounts have rainbows, like @EYPrivateEquity and the ever-popular @EY_MiningMetals. The latter appears to be abandoned and the account it points to — @EY_Energy — is not Prideified.

Is…rainbow capitalism over?

Related:

Also related: The Accounting Profession is Scaring Away Gay People (and Lesbians, and Transgender People, and…)

Comments are open but please keep it light and on topic.

The post Yo, Where Are the Rainbows? appeared first on Going Concern.

While scrolling Twitter today as I do every day, I kept coming across articles about some AI expert claiming that there’s a 99.9% chance AI will make the human race extinct. Perhaps you’ve seen the same headlines in the past day or so and perhaps you got a little freaked out too. Note the expert was talking about a 100-year timeline, not next year. This podcast interview with Dr. Roman Yampolskiy (Wikipedia) is what the articles are referring to and you might want to listen to the whole thing to fully understand what was said.

Not going to lie, it gets pretty dark.

So this “there’s a 99.9% chance AI will kill off the human race” headline is floating around. At the same time, a group of both current and former OpenAI and Google DeepMind employees warned on June 4 that AI in its current, unregulated state grants far too much power to AI companies that are beholden only to themselves. Remember pre-Enron when audit firms mostly regulated themselves because people assumed these trusted servants of capital markets would willingly do the right thing? Yeah.

Full text of the letter posted to righttowarn.ai:

In alphabetical order, the employees who signed the letter are: Jacob Hilton (formerly OpenAI), Daniel Kokotajlo (formerly OpenAI), Ramana Kumar (formerly Google DeepMind), Neel Nanda (currently Google DeepMind, formerly Anthropic), William Saunders (formerly OpenAI), Carroll Wainwright (formerly OpenAI), and Daniel Ziegler (formerly OpenAI). Four current and two former OpenAI employees elected to be anonymous. Additionally, the letter is endorsed by OG computer scientists Yoshua Bengio (Wikipedia page), Geoffrey Hinton (Wikipedia), and Stuart Russell (Wikipedia).

And all their footnotes with quotes and everything:

1. OpenAI: “AGI would also come with serious risk of misuse, drastic accidents, and societal disruption … we are going to operate as if these risks are existential.”
2. Anthropic: “If we build an AI system that’s significantly more competent than human experts but it pursues goals that conflict with our best interests, the consequences could be dire … rapid AI progress would be very disruptive, changing employment, macroeconomics, and power structures … [we have already encountered] toxicity, bias, unreliability, dishonesty”
3. Google DeepMind: “it is plausible that future AI systems could conduct offensive cyber operations, deceive people through dialogue, manipulate people into carrying out harmful actions, develop weapons (e.g. biological, chemical), … due to failures of alignment, these AI models might take harmful actions even without anyone intending so.”
4. US government: “irresponsible use could exacerbate societal harms such as fraud, discrimination, bias, and disinformation; displace and disempower workers; stifle competition; and pose risks to national security.”
5. UK government: “[AI systems] could also further concentrate unaccountable power into the hands of a few, or be maliciously used to undermine societal trust, erode public safety, or threaten international security … [AI could be misused] to generate disinformation, conduct sophisticated cyberattacks or help develop chemical weapons.”
6. Bletchley Declaration (29 countries represented): “we are especially concerned by such risks in domains such as cybersecurity and biotechnology, … There is potential for serious, even catastrophic, harm”
7. Statement on AI Harms and Policy (FAccT) (over 250 signatories): “From the dangers of inaccurate or biased algorithms that deny life-saving healthcare to language models exacerbating manipulation and misinformation, …”
8. Encode Justice and the Future of Life Institute: “we find ourselves face-to-face with tangible, wide-reaching challenges from AI like algorithmic bias, disinformation, democratic erosion, and labor displacement. We simultaneously stand on the brink of even larger-scale risks from increasingly powerful systems”
9. Statement on AI Risk (CAIS) (over 1,000 signatories): “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.”

On a more positive, or rather absurd, note there’s also this making the rounds:

You may have noticed AI “overviews” dominating any Google searches you’ve done in the past few weeks, summaries that are similar to the featured snippets we’re all used to but with pretty colors and an affinity for being batshit insane. I’d screenshot an example but I’m suddenly not seeing them in search…because they went so haywire Google decided to reduce their frequency by 70 percent. Luckily this recent article published by 404 Media has one.

From “Google Is Paying Reddit $60 Million for Fucksmith to Tell Its Users to Eat Glue“:

Screenshots of Google’s AI search going awry have gone repeatedly viral and highlight how hellbent the company is on giving its customers the most frustrating possible user experience while casually destroying the livelihoods of people who work for or make websites. They also highlight the fact that Google’s AI is not a magical fountain of new knowledge, it is reassembled content from things humans posted in the past indiscriminately scraped from the internet and (sometimes) remixed to look like something plausibly new and “intelligent.”

Seems the origin of the Google AI’s conclusion was an 11 year old Reddit post by the eminent scholar, fucksmith. https://t.co/fG8i5ZlWtl pic.twitter.com/0ijXRqA16y

— Kurt Opsahl @kurt@mstdn.social (@kurtopsahl) May 23, 2024

In a May 30 blog post titled “AI Overviews: About last week,” Head of Google Search Liz Reid was a little hand-wavy about just how bad AI Overviews were and why. TLDR: Fake news! Trolls!

Separately, there have been a large number of faked screenshots shared widely. Some of these faked results have been obvious and silly. Others have implied that we returned dangerous results for topics like leaving dogs in cars, smoking while pregnant, and depression. Those AI Overviews never appeared. So we’d encourage anyone encountering these screenshots to do a search themselves to check.

But some odd, inaccurate or unhelpful AI Overviews certainly did show up. And while these were generally for queries that people don’t commonly do, it highlighted some specific areas that we needed to improve.

…

In other examples, we saw AI Overviews that featured sarcastic or troll-y content from discussion forums. Forums are often a great source of authentic, first-hand information, but in some cases can lead to less-than-helpful advice, like using glue to get cheese to stick to pizza.

In a small number of cases, we have seen AI Overviews misinterpret language on webpages and present inaccurate information. We worked quickly to address these issues, either through improvements to our algorithms or through established processes to remove responses that don’t comply with our policies.

I could speak at length to how Google is destroying the internet but I’ll spare you for today. Let’s just say if the AI is blindly accepting random Reddit comments as authoritative fact, the truth is in trouble. Whatever happened to “don’t believe everything you read on the Internet”?

The post The Internet Is Rife with AI Buffoonery This Week appeared first on Going Concern.

• Firm structure and operational model
• Leadership and culture
• Talent
• Technology
• Financial performance and service lines

See: Here’s How Mid-Tier Accounting Firms Are Feeling About Private Equity and M&A for a breakdown on the PE and merger topic.

For this piece, we’re going to check out the talent portion and how hybrid work relates to it. We’ll get to technology in a later piece because once again this is going to run long. Everyone (by everyone I mean leadership) is waiting around for technology to swoop in and save the day but for the moment, adoption of next-gen tech solutions is slow. And that’s not necessarily a bad thing, the accounting profession is reactive and scared of taking big risks for a reason. See: Accounting Firms Will Not Be Leading the AI Revolution

The Talent Problem at Mid-Tier Accounting Firms

The short summary of the ICAEW’s findings is as follows:

Talent is the top challenge currently facing the mid-tier, with attraction and retention of qualified staff being the largest concern, and recruitment of trainees a secondary issue. The importance of future-proofing the skills of chartered accountants was recognized by firms, largely driven by changes in technology and the increasing breadth of work that they are likely to be required to perform. Firms recognize that they must be an attractive place to work. Nearly one-third of firms described their culture as ‘caring’ and while firms indicate a shift to more time working onsite, the majority still see hybrid working as the norm in the future. Investments in technology, offshoring and outsourcing initiatives can potentially help to address talent shortages and enhance operational efficiency.

Good luck with that.

An important distinction is revealed in the survey findings and it’s this:

“Recruitment of qualified staff was a top talent challenge for 67% of respondents, while recruitment of trainees was considered a challenge by 10%”

Meaning much lip service is paid to pipeline challenges but really, mid-tier firms don’t care so much about entry-level staff. Or at least they aren’t panicking about not being able to find them. A steady supply of fresh blood is how you get qualified staff but I suppose that’s a future problem we’re not too pressed about for now. They do sort of acknowledge this:

A top three talent challenge for 43% of those surveyed was ‘future-proofing skills’, which speaks to the need to ensure the quality of staff in the long term. Meanwhile, 45% of respondents confirmed that ‘succession planning’ was a key talent challenge. This seems to acknowledge the importance of retaining sufficient talent to maintain the partnership and its leadership team, which is corroborated by 14% selecting the ‘attractiveness of partnership’ as a challenge.

Respondents ranked their top talent challenges and, uh, yeah, recruiting trainees barely made the board.

Communication

Along with technological prowess, a good number of respondents listed excellent communication skills as most-desired in their staff.

Effective interpersonal skills With firms predicting that future clients will require more tailored support (31%) and demand a more personalized service (14%), effective communication and interpersonal skills will continue to be very important to build strong client relationships and collaborate effectively. Investing in business and professional skills at all levels within the firm would appear to be money well spent.

This is going to be a big problem in a few years as the group of professionals who experienced pandemic disruption four years ago at critical points in their adult lives like college and their first accounting job start reaching the higher rungs on the ladder. See: Big 4 Firms Are Noticing a Sudden Skills Gap in New Hires

On the topic of Gen Z — even though the mid-tiers clearly don’t care about the younguns — the report offers the usual crap about sustainability and purpose. No, Gen Z just doesn’t want to grind away at a spreadsheet for meager salaries. And millennials have been telling you this same thing for twenty years.

Culture
Gen Z have a different outlook on life to previous generations, prioritizing social responsibility, diversity, work-life balance and sustainability.

Let me interrupt them here. Stop it. Previous generations gave just as much a shit about work-life balance as Gen Z. It’s just that the talent pipeline was so robust no one in leadership cared to do anything about. Now that people at the experienced level are drifting away from the profession altogether the problem is getting worse because there are fewer people to share the load. If only they’d jacked up salaries 10-15 years ago when they had the chance.

Just 2% of firms surveyed described the culture of their firm as ‘environmentally conscious’, despite 38% stating that ESG considerations did impact decision-making at board level.

This disconnect may be contributing to the retention challenge within firms, as Gen Z seek employers that resonate with their beliefs and values. Although, when asked which words best described the culture in their firms, ‘caring’ was the third most popular choice, behind ‘collaborative’ and ‘client centric’. A sizeable proportion of respondents (21%-26%) also described their firms as ‘entrepreneurial’, ‘purpose-led’, ‘inclusive’ and ‘family-like’.

Let’s move on before I get annoyed.

Tied to communication, the report covered ways of working. According to this, the mid-tiers are accepting that some remote work is here to stay but clearly really, really want people in the office more.

Said the report:

Survey respondents indicated that client-facing staff are currently working on average two days in the office (or at client sites) each week. Looking to the next three years, respondents predicted this would change to staff spending the majority of their time in the office and at client sites. The portion of firms offering fully remote work is set to be nominal (2%), while at the other extreme 12% of those surveyed indicated that they anticipate a return to staff working fully on-site.

Changes to working patterns must allow firms to compete in recruiting and developing top talent while meeting the firm and client requirements to be on site. Hybrid working must be balanced with and aligned to individual client expectations. Close to one-third of those surveyed (31%) predicted that clients will want more tailored support in the future. Meanwhile, 14% believe clients will require more personalized relationships and their firm’s ways of working will need to deliver on this.

They really love saying they’re “collaborative,” don’t they? Walking up to someone’s desk to interrupt them when they’re in the zone is not collaboration, you guys.

When asked what word best described their firm’s culture, the most popular choice was ‘collaborative’ – which was selected by 45% of respondents. As hybrid working arrangements can create communication gaps and reduce spontaneous interactions among team members, there is a disconnect between that working model and many firms’ collaborative culture, driving a shift back to working in the office.

So that’s it on talent. If succession planning is really as important to them as they say they maybe should be a bit more worried about headcount than they purport to be. But whatever. Not my circus, not my monkeys spreadsheet jockeys.

Access the full ICAEW report here: Evolution of mid-tier accountancy firms

The post Here’s How Mid-Tier Accounting Firms Are Feeling About the Talent Crisis and Remote Work appeared first on Going Concern.