Well the year is just chugging along, here we are at the first Monday news brief of November. I trust you had your fill of candy the past few days. Now gorge on some news!
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.