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

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

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

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

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

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

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

Related:

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

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

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

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

If anyone has more info get in touch.

Armanino takes on minority investment [Accounting Today]

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

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.

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.

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

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

This is what they said:

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

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

Law firms are already promoting a potential class action suit.

Earlier:

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

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

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

Says Penn 1 owner Vornado Realty Trust of the building:

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

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

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

And they have on-site pickleball courts!

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

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.

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

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

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

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

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

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

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

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

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

Here are the details:

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

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

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

OK, we’re with you so far.

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

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

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

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

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

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

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

Whatever.

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

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

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

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

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

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

See the full list from INSIDE Public Accounting here.

Earlier:

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

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

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

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

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

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

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

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

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

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

We’ll be waiting.

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

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.

KROST may not be a well known headline-grabber and they’ve only got about 100 professionals on staff but they’ve been around since 1939. The firm you’ve never heard of until now provides accounting, tax, and business consulting services mostly to the hospitality, technology, financial services, manufacturing, real estate, sports and entertainment, nonprofit sectors.

Both firms involved in this union were quite transparent about their reasons for joining forces.

“The profession is evolving,” said Paren Knadjian, Principal, M&A and Capital Markets at KROST. “To stay relevant and, more importantly, to continue to provide a wide array of evolving services to our clients, we need the additional expertise and capital that a firm like EisnerAmper can provide. We believe they are the ideal partner to help us achieve that goal.”

As you may remember, EisnerAmper was the first big firm to bring in private equity at a time when such a deal was considered revolutionary. That time was only three years ago, believe it or not. Since then, they’ve been busy gobbling up small firms.

With the KROST deal they’ll gain another foothold in the Southern California market (they merged in La Jolla’s Lindsay & Brownell in 2022). “It’s strategically critical that we expand our presence in America’s second largest city,” said Jay Weinstein, EisnerAmper Vice Chair of Industries and Markets. “And I can’t think of a better partner than KROST, which has maintained a standard of excellence for more than eight decades. We warmly welcome them to the EisnerAmper family.”

That’s all well and good but when are you gonna give us another FORVIS? Think big, Eisner.

Relevant r/accounting discussion: EisnerAmper was the first large accounting firm acquired by private equity, back in 2021. For those who have worked at Eisner, what changes have taken place since PE took over?

The post EisnerAmper Snags Itself Another Small Firm appeared first on Going Concern.

Yet another accounting firm has reported a data breach, this time Heier Weisbrot & Bernstein of Gibbsboro, New Jersey and the details are a bit scarier than just bad actors caught digging around in the firm’s files. In this case, an unauthorized someone or someones got into HW&B’s tax software and attempted to file fraudulent tax returns.

This is what they said in a consumer notification filed with the attorney general of Maine on August 7 (emphasis ours):

Heier Weisbrot & Bernstein, LLC recently completed its investigation of an incident involving unauthorized access to a certain computer system in its network. On June 27, 2024, Heier Weisbrot & Bernstein, LLC detected an attempt by an unauthorized actor to file fraudulent tax returns for a small number of clients. The fraudulent returns were identified and reported to the IRS to be remedied. Heier Weisbrot & Bernstein, LLC worked with the IRS to ensure that any other attempted fraudulent returns are not processed.

Heier Weisbrot & Bernstein, LLC launched an investigation with the assistance of a third party cybersecurity firm. The investigation found that an unauthorized actor accessed Heier Weisbrot & Bernstein, LLC’s tax software between approximately June 22 and June 26, 2024. The files accessible in the tax software contained the name and one or more of the following for seven Maine residents: Social Security number, driver’s license number, and financial account number(s) used for direct deposit of any tax refund if provided to Heier Weisbrot & Bernstein, LLC. For certain of the individuals, the investigation could not conclusively determine whether their information was accessed or acquired by the unauthorized actor. Heier Weisbrot & Bernstein, LLC completed its analysis of the personal information contained in its tax software on July 29, 2024.

According to the full consumer communication filed with the Vermont attorney general [PDF], HW&B is offering a year of identity monitoring services through IDX. These services include: “one year of credit and CyberScan monitoring, a $1,000,000 insurance reimbursement policy, and fully managed identity theft recovery services.”

The firm went on to “strongly encourage” recipients to enroll in the IRS’ Identity Protection PIN (“IP PIN”) program and directed them to IRS.gov/IPPIN to do so.

Added the firm:

We apologize for any inconvenience this may have caused. We have and will continue to take steps to enhance the security of our computer systems to help prevent events such as this from occurring in the future.

See our previous coverage of accounting firm data breaches, including biggies at EY and PwC, here.

The post Hackers Tried to Help This Firm Get Through Their Tax Return Backlog, Fraudulently appeared first on Going Concern.

Can we talk about how Construction Executive trademarked the phrase “Top Construction Accounting Firms”? No? OK.

To determine which firm is the most constructioniest, CE surveyed more than 700 firms in the US that have a dedicated construction practice. The data collected in their survey include how much revenue the construction practice brought in for 2023, how many CPAs are in this practice, the percentage of total revenue the practice accounts for, the number of states in which the firm is licensed to practice, the year in which the construction practice was established, and the number of Architecture, Engineering, and Construction Services (AEC) clients served during fiscal 2023.

CLA tops the list with 12,656 construction clients, 265 construction CPAs (of 3,049 total CPAs at the firm), 56 states, and 7.86% of its revenue coming from construction work. CLA hit the $2 billion in revenue mark in 2023, you can do the math. Areas of practice include a bunch of acronyms we’re not going to bother looking up.

The #2 firm, Forvis, comes in at just 2,624 construction clients. CLA is the only firm on the list with five digits in the number of clients category, making it clear they really do dominate this sector.

Without further ado, the top 20 constructioniest accounting firms in order:

1. CLA
2. Forvis
3. Baker Tilly
4. Crowe
5. Marcum
6. Wipfli
7. Plante Moran
8. CBIZ/MHM
9. Moss Adams
10. CohnReznick
11. Eide Bailly
12. Grassi
13. Citrin Cooperman
14. RubinBrown
15. Doeren Mayhew
16. Aldrich CPAs + Advisors
17. WithumSmith+Brown
18. UHY Advisors
19. Anchin
20. Carr, Riggs & Ingram

“CLA has worked hard to know and help our clients in the construction industry. It’s such an honor to be recognized again,” said Tom Dearnley, managing principal of construction industry, CLA. “We are so grateful for our clients’ confidence in us and appreciate the opportunity to hone our industry specialization.”

Let’s give them a clap for this sweet win. Make sure to clap loudly so the sound isn’t drowned out by jackhammers and banging.

CLA Named 2024 Top US Construction Accounting Firm for the Fifth Time [CLA]

The post CliftonLarsonAllen Gets to Brag About Coming in First in Something Again appeared first on Going Concern.

Because it’s 2024 and the profession is currently being disrupted by private equity and spaghetti throwing, some of this data was in desperate need of an update before the virtual ink dried on insidepublicaccounting.com’s CMS (for example, last week’s news about CBIZ acquiring Marcum). But let’s review the first twenty anyway.

The order in which the ten biggest firms appear on this list is unchanged from the 2023 IPA Top 100. Combined, the 20 firms above reported revenue of $117,736,275,471. So nearly $118 billion.

The smallest firm in the top 100 is Atlanta’s Smith + Howard with revenue of $53,193,000. The absolute last firm on the list of 500 is Shannon & Associates of Kent, Washington with a respectable $6,063,000 in revenue.

IPA trickles out a bunch more data it’s gathered on participating firms so keep an eye out for that in coming weeks.

The post The Biggest Accounting Firms in the US Whip It Out and Compare Size in This Much Anticipated List appeared first on Going Concern.

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.

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.

• Matthew Bohdan, risk and accounting advisory services, Southfield
• Eric Bowers, Plante Moran Financial Advisors, East Lansing
• Amanda Carrigan, risk and accounting advisory services, Denver Tech Center
• Alicia Cole, wealth management, Detroit
• Ben Cote, tax, Denver Tax Center
• Adam Counts, assurance, Southfield [Ed. note this has to be one of the best accountant names in history]
• Ryan Defer, tax, Chicago
• Stephen Eckert, tax, Chicago
• Ryan Fedricks, Plante Moran Financial Advisors, Auburn Hills
• Alan Gallatin, tax, Southfield
• Dana Hullinger, tax, Southfield
• Curt Hurd, assurance, Southfield
• Rachelle Jeselnik, tax, Chicago
• Matthew Keigher, assurance, Auburn Hills
• Chad McCoy, tax, Chicago
• Amber Mitchell, assurance, Cincinnati
• Sara Montgomery, wealth management, Denver Tech CenterStephen Palmer, tax, Columbus
• Laura Parish, tax, Chicago
• Shawn Riley, Plante Moran Financial Advisors, Southfield
• Mark Sommerfeld, tax, Grand Rapids
• Justin Switzer, tax, Ann Arbor
• Colin Taggart, cybersecurity, Southfield
• Alisha Taranek, tax, Ann Arbor
• Jessica Wiltjer, tax, Grand Rapids

So if we managed to add correctly, tax comes out on top with 12 people followed by assurance with four, Financial Advisors with three, risk and accounting advisory with two, wealth management also with two, and cybersecurity with one.

In addition to these 25, two people were promoted to affiliated entity members:

• Jonathan Grossman, Plante Moran Trust, Chicago
• Zack Otte, Plante Moran Realpoint Investment Advisors, Denver Tech Center

“We’re excited to welcome these incredible professionals to our partner group,” said Jason Drake, Plante Moran managing partner. “This group of leaders has already added so much value to the firm and there is no doubt they’ll continue to contribute to Plante Moran’s overall growth, success and culture.”

Plante Moran promotes 25 new partners and two new affiliated entity members [Plante Moran]

The post Promotion Watch ’24: Plante Moran Welcomes 25 New Partners and Two Other Guys appeared first on Going Concern.

Wow. This is apparently the view from the office, at least we’ve surmised as much based on the submitter’s caption “View from Microsoft Office.”

We thought this was the view from Microsoft Office:

Here are some better pictures from CBRE in case anyone’s looking for “what’s arguably the best combination of views, location and amenities in Bellevue’s CBD” for a mere $55 per square foot.

Clark Nuber has occupied the same office for nearly 25 years so they were long overdue for a change of scenery. The new building is recently renovated and includes a new conference center, “athletic-quality” gym and spa, bike storage, EV charging stations, and a sick outdoor plaza.

Enough about the amenities though. Let us call attention to this quote from The Registry story:

During the beginning stages of the design process, Erin Green, director of operations at Clark Nuber, expressed how important it is to ensure each seat honors the various ways different team members work.

“The pandemic taught us that people can be productive in a variety of ways,” said Green. “We seized the opportunity to rethink, reimagine and reshape our habitat.” The new office will see a different mix of private offices, open plug-and-play workstations and team rooms arranged in a way that “democratizes daylight,” showing how Clark Nuber puts their people first and truly prioritizes this new space for the betterment of their team’s culture.

Being work-from-home slobs who work in poorly lit apartments and under the moody light of coffee shops (yes, people still do that), we had to Google “democratizing daylight.” It was either that or ask the comment section to guess what that means and some of you work in even darker, danker caves than we do. The first result was this 2011 article about Aflac:

A dark workspace is an unhealthy workspace, and Aflac’s executive management and board of directors knew it well. Although the past 20 years have seen the insurance company making a push toward eco-friendly practices—including reducing energy consumption by more than 30 percent per square foot in its offices—a significant renovation of the company’s customer service center (CSC) would be the most dramatic effort to date. The work performed centered on giving employees access to the building’s windows and views, creating healthier indoor air quality, and reducing energy consumption by more than 40 percent.

OH. It’s windows. Got it. Nice.

Clark Nuber Leases Two Floors Vacated by Microsoft in Bellevue’s City Center Plaza Building [The Registry]

The post Up-and-Comer Seattle Area Firm Clark Nuber Decided Its Staff Probably Need More Sunlight 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.

So FT ran this yesterday: ‘Private equity groups poised to own one in three top US accounting firms‘ and in it, they paraphrased people familiar with the matter as saying “ten of the 30 largest US accounting firms could soon be in private equity hands.”

The article goes on to say:

The acquisitions by financial buyers of those two top-10 firms by revenue opened the floodgates to other deals, the people said, positioning private equity to increase its influence over the US accounting profession dramatically.

One top-30 firm, Atlanta-based Aprio, was planning a deal to sell a majority stake to the private equity firm Charlesbank Capital, according to people familiar with the situation.

Two more — New York’s PKF O’Connor Davies and Carr, Riggs & Ingram of Alabama — had engaged bankers to run sale processes, they said.

The two top-10 firms they’re talking about are Grant Thornton and Baker Tilly.

FT has some details on each of the firms mentioned, such as Carr, Riggs & Ingram shopping themselves out to three suitors and using “premier global boutique” investment bank William Blair to advise on the deal. And PKF O’Connor Davies working with Capstone Partners. Both firms failed to respond when FT reached out for their piece.

Aprio did respond but hit ’em with a no comment. We’re told by a tipster Aprio is in the middle of a private equity deal that is “all but finalized,” information that was passed along to staff in a town hall yesterday. This Reddit comment co-signs that story:

Comment
byu/Designer-Can-5891 from discussion
inAccounting

There’s also apparently some drama with the IT team getting ousted but we need to dig into that some more.

If you’ve got more info, you know what to do. Anonymous tips can be sent by email or text.

Update: There’s a Reddit thread about this situation worth sharing with you. The fear and uncertainty is not unexpected but unpleasant to read regardless.

Private Equity Buyout at Aprio
byu/Intelligent-End-8973 inAccounting

The post We Think We Know Who’s About to Do a Big PE Deal (UPDATE) 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.

As you may remember, last November we were first out the gate with a rumor that Forvis was set to do a big merger. Apparently us letting the cat out of the bag was not well-received by certain Forvis partners who said “don’t believe everything you read on Going Concern” only for the news to hit the “real” media a day or so later. Still, they have a point.

Well unlike the Elliott Davis/Whitley Penn merger that fell apart in the eleventh hour — news that we also reported first *ahem* — Forvis and Mazars were able to hammer out the details and made their alliance official as of June 1.

Two leading professional services firms, Mazars, an international partnership operating in over 100 countries and territories, and FORVIS, a top ranked firm in the United States, today mark the official launch of their new global network, Forvis Mazars.

Forvis Mazars, a top 10 global network* is the largest new entrant into the global rankings in decades. As a two-firm network, Forvis Mazars is unique in the market and provides the agility, capacity and coverage to support clients wherever in the world they operate. This move brings increased choice in the market, serving the public interest.

It was exactly two years ago that BKD and DHG joined forces to become Forvis (that name is still stupid). Prior to that merger, the two firms were in the 14th and 17th spots, respectively, on the IPA 100 in 2021. Combining their powers pushed the conjoined firm to the 8th spot on the list the following year.

While the deal with Mazars’s global operation isn’t exactly a merger merger, Forvis did absorb Mazars USA. Mazars ‘Murica sat at #31 on last year’s IPA 100 ($258 million in revenue) so combined with Forvis’ $1.7 billion that’s still a ways behind #7 Grant Thornton’s $2.3 billion. Though who knows what’s going to happen at GT in the next few years. The absorption of Mazars USA will add 1,000 more professionals to Forvis’ existing stable of 7,000 and 14 office locations to however many Forvis had before which brings their total locations to more than 80.

The newly formed Forvis Mazars boasts more than 40,000 professionals in 100 countries. Mazars appears to have beat out Forvis for who gets to keep their logo as the new group is wearing Mazars’ old outfit.

The new network will have a global board overseeing operations. That board is:

Hervé Hélias will serve as the first Chair of the Global Network Board. Hélias also will continue to serve his ongoing mandate as Chairman of the Group Executive Board of Forvis Mazars Group, SC (formerly Mazars Group). Matt Snow, Chairman of Forvis Mazars, LLP (formerly FORVIS, LLP) will serve as Vice Chair of the Global Network Board.

In the United States, Tom Watson will continue to serve as CEO of Forvis Mazars, LLP (formerly FORVIS, LLP) and will also sit on the Global Network Board. Rob Pruitt, Fran Randall and Tim York from Forvis Mazars, LLP will sit on the Global Network Board.

David Chaudat, Pascal Jauffret, Véronique Ryckaert and Phil Verity from Forvis Mazars Group will sit on the Global Network Board.

Good thing Hervé Hélias isn’t going anywhere because that guy brings so much European swagger (Lord knows Forvis needs all the cool points they can get).

Alright, brace yourselves for the quotes.

Hélias comments: “This is a momentous and exciting time for our clients, our profession and our people. Mazars and Forvis have worked together for over 20 years and share a commitment to delivering an outstanding client experience. We are well positioned to deliver excellence, everywhere, under a single global brand. Clients will get consistent, high-quality, comprehensive services worldwide, and we remain agile and flexible to their specific needs. I am extremely proud to serve as first Chair of the Global Network Board. Working together, I am confident that our two firms will continue to empower our people to raise the bar for client service standards, while challenging industry opportunities to support future needs in local markets.”

“Forvis Mazars is built on our commitment to listen to our clients, anticipate the challenges they face, and deliver an unmatched client experience in all that we do,” Watson said. “This new network will quickly unlock new opportunities for our clients and our people, and both groups can feel confident that we are making decisions with their long-term success in mind.”

There are a few leadership changes to note as well.

New Managing Partners
Connie Cagle – Boston
Chris Clark – Dallas
Chris Lindner – Nebraska
Karine Philippon – California & Arizona
Danielle Solomon – Chicago
Heather Wallace – Birmingham, Alabama & Jackson, Mississippi
Andy Williams – Arkansas

New Assistant Managing Partners
Paula Ferreira – New Jersey
Craig Fine – Long Island
Marty Garland – Philadelphia
Carlos Martins – New York City
Rob Opitz – Fort Worth
Andy Young – Fort Wayne, Pittsburgh & Charleston

New Industry Leaders
Brad Brotherton – Healthcare National Industry Leader
Ashley Ensley – Financial Services National Industry Leader
Steve LaFrance – Healthcare Consulting Managing Partner

New Firm Leaders
John Roberts – Chief Performance Officer
Jim Blake – Co-Regional Managing Partner, Northeast Region

If anyone has details that didn’t make the press release and would like to ruin a partner’s day, get in touch. Tipsters are anonymous, always.

Congrats to the happy couple.

The post Forvis and Mazars Consummate Their Union with a Postnuptial Jerk Off appeared first on Going Concern.

Based in Massachusetts, Rinke has more than two decades of international tax experience, notably involving cross-border transactional and operational planning for multinational corporations. His diverse industry experience includes pharmaceutical, biotech, manufacturing, chemicals, semiconductors, retail, and finance.

As you can see, he’s thrilled to be opening this next chapter in his esteemed professional career.

The rest of the news release is the usual fluff meant to flaunt their new recruit’s wealth of experience to current and prospective clients. “Rinke is focused on providing strategic guidance that helps clients address changing macroeconomic conditions, reconfigure operational profiles to improve business sustainability, and navigate complex global tax laws and regulations.” We get it, he’s good.

PwC isn’t specifically mentioned in the press release (“a Big 4 firm”) because that would be tacky. They do, however, drop other names:

He earned a JD, cum laude, from Syracuse University School of Law; an LLM in Taxation from Georgetown University School of Law; and a BA in Philosophy, cum laude, from Minnesota State University Moorhead.

Going by Daniel Rinke’s LinkedIn experience, it’s unclear if this was an outright robbery. Usually when someone is unhappy at their current firm and leaves for another, they align their leaving and starting dates to reflect a direct jump which he has not.

Hilarious. Did a year as associate at KPMG and was like nah, I’m outta here. Good for you, Dan.

Best of luck to him in the new gig. That’s not sarcastic.

Rinke joins CohnReznick as International Tax Principal [CohnReznick]

The post CohnReznick Snags a Longtime PwC International Tax Guy and Issues a Press Release appeared first on Going Concern.

Reports Commercial Observer:

Accounting and business consulting firm Armanino is reaching for the stars, with two full-floor leases at Irvine Company’s 2121 Avenue of the Stars and 400 Spectrum Center.

The firm inked deals for 23,450 square feet at the prominent 2121 Avenue of the Stars in Los Angeles’s Century City, and for 22,000 square feet at Orange County’s 400 Spectrum Center, according to the landlord.

That article contains one of the corniest, most self-fellating quotes we’ve ever read (that’s saying a lot). “We continue to see more customers like Armanino lease office space across multiple markets,” Roger DeWames, president of Irvine Company Office Properties, said in a statement. “This trend demonstrates the ongoing flight to quality and the ever-growing importance of choosing not only where your company works, but who your landlord is.” Rog, we’re gonna need you to rein it in a little, buddy.

The landlord views this prime location in Irvine as a plus when recruiting talent even.

As far as we can remember, Armanino started gunning hard for a big stake in the Los Angeles market in the early part of the last decade. Seems that’s working out well for them.

The post Armanino Leased a Ton of Office Space in SoCal appeared first on Going Concern.

As for how it went down:

Meetings were added to people’s calendars late Thursday evening.

Friday rolls around and:

Comment
by from discussion
inAccounting

Classy, Crowe. As far as we know not everyone was on a single call, some laid off staff had one-on-ones.

The firm states it has “more than 5,000 specialists delivering exceptional client service in offices across the US,” three percent of that would be 150 people. Their Fortune Great Place to Work page — they came in #32 on this year’s list — says the exact number is 5,121. 4,921 now.

One commenter here says the OG partners at Crowe aren’t bringing in business leading to too many people twiddling their thumbs at the bottom rungs of the ladder. “There are older partners who are just dead weight, not selling anymore, but they keep getting the big K-1,” they wrote. “Not long ago they were hiring like crazy and appears overhired at this point. But some staff with low hours is driven by the fact the partners aren’t selling work. Plus this firm has created such a soft culture, with too much emphasis on DEI. It’s crazy that there’s no change in leadership at the top. They’re going to pin it all on underperforming staff and the market, which is some of it, but there are real leadership issues at this firm.” As of 2022, the firm had almost 500 partners (source).

As for how the firm is doing, Crowe hit the billion dollar revenue mark for the first time in 2022 and saw $1.3 billion in revenue for the fiscal year ending March 31, 2023.

The post Layoff Watch ’24: Crowe Cut Some People on Friday, Here’s What We Know appeared first on Going Concern.

The press release reveals a clue to Baker Tilly’s big plan: get in on that sweet Bay Area tech money.

This move represents Baker Tilly’s commitment to expanding its footprint in the San Francisco Bay Area, reinforcing its dedication to delivering unparalleled service to family offices and ultra-high-net-worth clients.

With a 65-year legacy, Seiler has established itself as an iconic advisory, tax and accounting services provider with deep roots in the Silicon Valley and the San Francisco Bay Area. Seiler’s reputable work serving ultra-high-net-worth individuals, families, closely held enterprises and non-profit organizations across the country strengthens Baker Tilly’s expertise in this space and its dedication to delivering tailored solutions and fostering enduring client relationships. Seiler’s legacy speaks volumes about its expertise and influence, making it a natural choice for Baker Tilly as it seeks to bolster its Bay Area presence and capabilities.

“The Bay Area market is a major business incubator on the West Coast and an international connection point,” said Baker Tilly Bay Area Managing Partner Lynette Stolarzyk. “Our combination with Seiler will enable us to continue growing and injecting innovation, value creation and an elevated customer experience in this pivotal market.”

The deal will involve some personnel changes. Seiler CEO George Marinos will become Baker Tilly’s Regional Tax Leader – Western U.S., succeeding Gabe Torre who will step into the role of Managing Partner – Western U.S. That means current Western MP Steve Milner (“with an illustrious 35-year career at Baker Tilly and Squar Milner,” the press release adds) will retire. Seiler Partner Ron LaVelle will be Baker Tilly Private Wealth practice leader.

We’ve been hearing rumors of some other personnel changes at Baker Tilly that won’t be making press releases if you catch our drift. If you happen to know anything about that, get in touch by text or email (anonymous, always).

Baker Tilly strengthens Bay Area presence with Seiler acquisition [Baker Tilly]

The post Flush With PE Cash, Baker Tilly Buys the Bay Area’s Seiler appeared first on Going Concern.

Bain Capital’s PR people announced this morning that BC is putting $250 million into Top 30 firm Sikich (which we always want to type out as Sickish), an investment only slightly less than the Naperville, Illinois firm’s last reported revenue of $316,397,417 (per the IPA Top 500). That’s quite the growth bet.

Sikich will maintain majority control.

The press release is everything you’d expect it to be and more:

Founded in 1982, Sikich has been on a path of rapid growth under the leadership of [CEO Christopher] Geier, who assumed the CEO role in 2017. During this time, Sikich has grown revenue nearly 300% and expanded its geographic reach, now serving clients in all major U.S. markets and around the world with nearly 2,000 employees.

“This is an incredibly exciting time for our organization. We’ve been executing an ambitious growth and diversification strategy to capitalize on unique and favorable market conditions within an evolving professional services landscape, more than doubling in size over the last five years alone,” said Mr. Geier. “Partnering with a leading global investor like Bain Capital is a testament to our strategy and provides us with additional meaningful resources and extensive knowledge to advance our mission and deliver on our value proposition to employees and clients.”

Bain Capital Special Situations partner Cristian Jitianu had nice things to say, too. Particularly about the firm’s supreme leader. “We have watched Sikich thrive under Chris and his talented team’s leadership as they continue to set the industry standard across their leading accounting, technology and advisory solutions,” he said. “As competition for talent and clients remains high, Sikich’s differentiated business model has enabled the company to gain share in a fragmented market. We are excited to support Sikich’s continued growth strategy, focused on acquisitions and strategic partnerships, with a tailored structure that maximizes value creation while allowing Sikich to retain majority control of the business.”

Oh my God, it keeps going.

“Bain Capital has already proven to be a collaborative and solutions-oriented partner, confirming what we know to be a great cultural fit between our two organizations,” added Mr. Geier. “We’ve held firm to our vision for Sikich over the last several years and, with their support, I am confident in this next chapter of our journey and what we can accomplish.”

Sickish Sikich has been on quite the acquisition spree in recent years. Just a few highlights from their press releases:

Sikich acquires human resources technology consulting business – Sikich LLP

Sikich grows Chicago-area presence with acquisition of accounting practice – Sikich LLP

Sikich expands accounting, tax and audit team with acquisition – Sikich LLP

Sikich expands into Washington, D.C., area with acquisition – Sikich LLP

Sikich expands presence in Milwaukee market with acquisition – Sikich LLP

Sikich boosts advisory services with acquistion – Sikich LLP

Sikich expands in St. Louis with acquisition of Hochschild, Bloom & Company – Sikich LLP

Sikich expands central Illinois presence with acquisition of Heinold Banwart – Sikich LLP

Sikich expands digital transformation services with acquisition of quality management and insurtech consultancy – Sikich LLP

Sikich adds to accounting practice with Stanfield – Sikich LLP

Sikich LLP expands into Southern California – Sikich LLP

The most recent for them appears to be buying up CliftonLarsonAllen’s federal government practice in DC. The whole thing including 70 employees and four principals. They first elbowed their way into Washington in 2019 when they bought Halt, Buzas & Powell. Three years later, they acquired Cotton & Company.

Sikich fed government partner Steven Koons gives them 5 stars.

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

Technology-Enabled Professional Services Firm Sikich Secures $250 Million Minority Growth Investment from Bain Capital [Bain Capital]

The post Sikich Is the Latest Firm to Take an Outside Capital Injection appeared first on Going Concern.

Trump Media’s accounting firm has a 100% deficiency rate from U.S. audit watchdog and counts Lingerie Fighting Championships as a client [Fortune]

OK, actually that’s the only funny headline we’ve seen. And this one from FT is most informative:

The accounting firm picked to audit Donald Trump’s social media venture has had repeated run-ins with regulators and faced criticism for its failure to live up to professional standards in the US and Canada, according to a review of public filings.

BF Borgers has become one of the most prolific auditors of US public companies just 15 years after its foundation, and regulators have warned that it has taken on new clients faster than it can manage.

The Colorado firm, set up in 2009 by former IT consultant and Jeep enthusiast Ben Borgers, was thrust into the spotlight this week when its audit report on Trump Media & Technology Group flagged that the newly listed social media group could run out of money within a year.

This one Quartz posted yesterday — Trump Media’s audit firm sees its business practices come under scrutiny — discusses how Borgers, a firm headquartered in Denver, was banned by the Canadian Public Accountability Board (or as we refer to them here, “polite PCAOB with funny accents”), the second such American firm to get shooed away by the CPAB (the first was Marcum because of course it was).

In its enforcement action [PDF], the CPAB said the files of two issuers (clients) contained 19 significant inspection findings, each of which constitute a separate Violation Event. In addition, Borgers failed to properly consider the Canadian provincial licensing requirements during the firm’s client acceptance procedures. So they’re shunned from Canada now.

Borgers is among the top ten busiest audit firms according to the most recent Ideagen Audit Analytics audit market share data. Including SPACs, they have 173 SEC clients which puts them just under BDO with 182 and above RSM with 129. In its 2021 inspection report [PDF], the PCAOB said Borgers “significantly increased its number of issuer audit clients from 80 in 2019 to 168 at the outset of the 2021 inspection (or by 110%)” and added:

In accepting these new clients, the firm did not take into account the level of proficiency required for the firm’s partners in the circumstances as well as competing time demands on the partners assigned to lead and execute the audits and perform the engagement quality reviews for all of its issuer audits. For example, during the year, there was one engagement partner who was responsible for 147 issuer audits. Further, there was one engagement quality reviewer who was responsible for 103 issuer audits and another who was responsible for 74 issuer audits.

But we’re not here to talk about Borgers. We’re here to talk about Withum because according to fresh reporting from Financial Times and their little birdies, Withum almost got stuck with this client — and all the sassy headlines that come with — instead:

Donald Trump’s social media company scrambled to find a new auditor after its first pick resigned after just a few months on the job, according to people familiar with the matter.

Trump Media & Technology Group engaged WithumSmith+Brown to check its financial statements shortly after the company was founded in 2021, but by the end of the year the accounting firm had decided it did not want to be associated with a business venture by the former US president, these people said.

Longtime Trump Organization accountants Mazars broke up with the former president’s company just days before Valentine’s Day 2022 and said in their breakup letter “the Statements of Financial Condition for Donald J. Trump for the years ending June 30, 2011 – June 30, 2020, should no longer be relied upon.” So it seems Withum dipped out just in time.

Can we include this bit from the FT article? Because LOL.

In a previously unreported development, BF Borgers has also been thrown out of the accounting profession’s own inspection programme in the US, a peer review system run by the American Institute of Certified Public Accountants. Reviewers found multiple instances of the firm failing to meet professional standards in its audit work.

“The firm was found to be so seriously deficient in its performance that education and remedial, corrective actions are not adequate,” the AICPA concluded in November.

BF Borgers did not return messages seeking comment. TMTG [Trump Media & Technology Group] said: “Apparently, the Financial Times’ business model is to charge its subscribers $75 per month for the privilege of reading outdated stories touting irrelevant information.”

Somewhere in Princeton, New Jersey rings out the sound of high fives and glasses clinking.

Trump Media’s first auditor quit months after being appointed [FT]

The post Withum Noped Out of Trump Media So Fast appeared first on Going Concern.

This year, they only narrowly beat out Deloitte again.

Plante Moran and Deloitte climbed from 16 and 17 (respectively) on last year’s list where they were also close neighbors.

Other accounting firms on the list sorted by descending order with last year’s rank in parentheses are:

• #22: PwC (30)
• #32: Crowe (60)
• #44: RSM (42)
• #54: Ryan (56)
• #64: EY (50)
• #72: KPMG (38)

So Deloitte stayed in the top 20, PwC climbed a few spots up from #30 last year, EY tumbled 14 places to #64 and KPMG…well.

Full list and company profiles here.

The post Mid-Tier Firms Are Kicking Big 4’s Ass on Fortune’s 2024 Best Companies to Work For List appeared first on Going Concern.

Before anyone judges this too harshly, let’s remember it was 2012. Just the fact that a sub-$100 million revenue firm had a YouTube channel they didn’t immediately abandon is amazing on its own. And they’ve been maintaining it all these years.

So here’s the celebration video.

Said the firm in a blog post:

Using the timeline created by Maraziti, the video’s song lyrics were written and performed by Withum’s Seattle-based team member Matt Swanson. Viewers take a journey through time, recapping both world and Withum’s history as team members display workplace and street fashions in decades from 1974 to 2024. Founders Ivan Brown and Len Smith introduce the video, featuring team members from over 15 offices and work-from-home locations.

“We dug into our archives and utilized tech hardware that our IT team kept from our past,” said Matt Basilo, Senior Interactive Marketing Manager and project lead. “We also used our vintage swag and past logos to really replicate what our offices looked like in those time periods. It was a blast recreating our work hard/play hard mantra over 50 years, honoring our ‘special culture before it was a thing.’”

Additionally, a special tent was erected at the venue, in which installations, such as the 20’ x 11’ timeline wall of key moments and photos, were displayed. Several screens played past culture videos, along with photo montages of each decade, featuring Withum team members, offices, events and leadership throughout the years.

Withum is currently #22 on the INSIDE Public Accounting Top 100 with $519,847,000 in revenue (and climbing). Happy birthday to them! We hear 50 is the new 40.

The post Withum Turns 50 appeared first on Going Concern.

Shortly after the KPMG news came out, the AFM asked the other large firms in the country — BDO, Deloitte, EY, Mazars, and PwC — to do their own internal investigations to sniff out answer-sharing among their staff. Deloitte hasn’t announced the result of theirs but Chief People and Quality Officer Rob Bergmans did resign last year related to it. “Given the facts which have emerged during the investigation, it would not be in the interests of the organisation if I remain on the board or as partner,” he said on his way out the door.

While nothing definitive has been announced yet, Mazars Netherlands has now strongly alluded to some cheating in its most recent annual report. Here’s what they said:

Misconducts on exams
At the end of 2022, the audit profession was startled by both national and international signs regarding
misconducts on exams. Based on this development, we started our own investigation on potential
misconducts on trainings with exams, amongst others resulting from the request of the AFM to Mazars, as well as all other PIE audit firms. The investigation is currently ongoing and final results are expected within the upcoming months. The Supervisory Board is strongly involved in this investigation. Misconduct in this domain contradicts with our values and Code of Conduct, our professional values and position in society. We will act accordingly in the investigation and the outcome of the investigation.

Later in the report, Mazars reveals the two whistleblowing reports the firm received for fiscal 2022/23 were related to “potential misconduct” on exams.

“So why is this news on an American website?” I can’t hear you asking because I blew my hearing out at too many concerts in the 90s. Well, because the PCAOB is still digging around and this could end up a whole thing given how aggressively they’re fining firms these days. Said NL Times:

The American regulator PCAOB is also involved in several investigations. American law allows the regulator to fine accountants in other countries that audit the books of companies listed in the U.S. The Americans’ involvement is one of the reasons why the investigations into exam fraud are taking so long, according to FD.

Yeah, that’s gonna be a biggun.

In late 2022, the PCAOB levied millions of dollars against KPMG Colombia and KPMG UK for sharing answers (among other things like altering audit documentation and providing altered documents to the PCAOB but whatever). PwC China and PwC Hong Kong were hit with a $7 million fine for “improper answer sharing” (cheating) last year. PwC Canada staff were sharing answers during mandatory, open-book internal training assessments for four years and not only didn’t see a problem with it, they “viewed sharing answers as part of a collaborative culture at PwC and because the assessments were open book” per a CPA Ontario order hand-slapping them for cheating.

So this is a pervasive issue across the globe. Regulators might use words like “shocking” in press releases but really it’s not because everyone does it and everyone knows everyone does it. Look at KPMG and Mazars in the Netherlands, one person at KPMG and two people at Mazars reported cheating to their superiors. Everyone else just went along with it.

On the surface this seems to be strictly a discussion on ethics but the conversation must acknowledge the plague of overwork that hangs over accounting firms everywhere. One of the partners caught backdating workpapers at Deloitte Canada recently specifically said “she recalled doing so as a mechanism to manage time constraints and volume of work” so it’s not just early-career auditors sharing answers on bullshit internal training to grind it out. Let’s meditate on that before even more fines come pouring down the pipe.

Related:

The post Mayo-on-Fries Mazars Might Join KPMG and Deloitte in the Exam Cheating Hall of Shame appeared first on Going Concern.

Reuters:

BDO also named as a defendant Phuoc Vin Phan, a former national practice leader of its healthcare transaction advisory team. Phan led the 11-member group from 2019 to January of this year, according to the lawsuit, before jumping to New York-based Ankura. The lawsuit alleged Phan broke his BDO employment agreement in the move.

The language used in this lawsuit is pretty incendiary. It alleges 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.

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.

BDO is seeking $60 million in damages and an injunction that would prevent Ankura from pulling another robbery off this caliber (note: we mean “robbery” in the meme sense, not in the “a crime was committed here” one). The lawsuit embedded below gives quite a bit of insight into BDO employment agreements and states Phan was unhappy with BDO changing from a partnership to a corporation structure last year, might be worth a deeper dive.

Per the lawsuit, Phan resigned from BDO on January 9, 2024 and subsequently told the firm he was taking a new position at Ankura. And then:

Between January 5 and January 12, 2024, seven of the then 11 full-time employees in BDO’s Healthcare TAS practice—all of whom directly reported to Phan—resigned from BDO. They are Johnny Beauplan (“Beauplan”), [Thomas] Bradey, Zachary Gentry (“Gentry”), Aram Gupta (“Gupta”), William Mixon (“Mixon”), Jeffrey O’Brien (“O’Brien”), and [Mitchell] Thomas.

You can read the rest:

Keep ya posted!

To speak with Going Concern editors and/or submit a confidential tip, contact us at editor@goingconcern.com or text 202-505-8885. Tipsters are always anonymous.

The post BDO Lawsuit Alleges a Defector Took the Team With Him When He Jumped Ship to Another Firm appeared first on Going Concern.

Of note, and barely mentioned in the press release, is Edwards’ prior gig:

Edwards joins Crowe from EY, where he began his career and most recently served as Americas, Consumer Industry Supply Chain Leader. In addition to his work with EY, he also served as a senior leader of supply chain improvement with General Mills. Edwards received his BBA from the University of Notre Dame and an MBA from Indiana University.

His LinkedIn is conveniently linked in the announcement:

Wow, that’s a direct yoink from EY. Nice.

“I am thrilled to join Crowe, a firm with an impeccable reputation built on culture and values,” Edwards allegedly said. “Every interaction I’ve had with people in the firm has demonstrated that the reputation they’ve earned is well founded and very real.”

Crowe LLP names Mike Edwards new managing principal of its consulting business [PR Newswire]

The post Crowe Poaches Someone From EY and Issues a Press Release appeared first on Going Concern.

That’s it, that’s the story.

Accounting firm FORVIS moves to top floor of PNC Tower in downtown Louisville [WHAS]

The post FORVIS Shows Off Its New Office In Loo-Ville appeared first on Going Concern.

Ad Age reported earlier this month that PwC has appointed Interpublic Group of Cos.’ McCann — we’ll just call them McCann — as its global creative agency per a memo someone slipped Ad Age‘s way. They said:

Multiple people close to the situation confirmed the appointment. McCann declined to comment and referred calls to PwC, which declined to comment.

It is unclear if PwC previously had a global creative agency lead.

We’ve got you, Ad Age reporter who isn’t fully caught up on the Big 4 professional services firm design lore.

In 2010, PwC underwent an ambitious rebranding (a story we managed to break because we enjoy ruining big reveals) that ditched the old “graphic designer driving down pothole-filled road in a car with busted suspension when they created this” PricewaterhouseCoopers branding and replaced it with the autumnal logo and recognizable color palette the firm uses to this day.

The lowercase ITC Charter Black name was intended to lend a more “human” look as capital letters would be “too authoritative.” And the flower — which I always assumed was a butterfly? — was intentionally given a pixelated look because 2010 graphic capabilities across various systems were spotty at best.

The rebranding was the work of branding powerhouse Wolff Olins and eight years in the making by the time it became official on October 4, 2010.

Not everyone was happy when the new logo debuted. Actually, a lot of people weren’t. Like this person who CC’d us on the email he sent directly to then-PwC US Chairman Bob Moritz lambasting PwC’s child-like and unprofessional new logo:

To be perfectly honest, I’m not a fan of the new branding. In your email you wrote “…we are altering what we believe is an outdated visual identity to better express the kind of vibrant and relationship-based firm we have evolved into.” I find it ironic that you referred to our former visual identity as outdated when our new brand looks like a throwback – a 70s color scheme meets an IT startup.

I completely agree with the comments on the website where the brand is repeatedly referred to as child-like and unprofessional. I feel like the explanation for the symbol is also very complex. The *connectedthinking brand was simple and easy to understand. With the new symbol, everything has a meaning, from the colors to the solid blocks to the transparent blocks. A symbol should be fairly self explanatory – this one requires too much explanation.

I love the fact that the company has been focusing more on changing behaviors and placing a greater emphasis on building relationships. However, I fail to see where a new brand would affect this. Colors and symbols don’t represent PwC, the staff does. In one of the online discussions it was pointed out that following a salary freeze one year and layoffs the following year, it almost seems foolish to spend so much money to “reinvent” ourselves. To quote a wise PwC employee, “A new brand isn’t going to win business, motivated people will.” I find it hard to believe that this new, colorful symbol will be the motivation that people need to help expand our business and improve relationships with clients. A better way to motivate the staff would be more incentives – bonuses, rewards, raises – positive reinforcement. Pavlov was definitely on to something with the concept. Interactive gallery stations complete with iPads to show off the brand? Activities revolving around the launch of this new brand? Is this really the best method of spending funds?

BoMo must have gotten several of these emails because he sent out a FAQ to all employees shortly before the new logo dropped for real:

By now you’ve likely checked out the new PwC brand. Not surprisingly, I’ve gotten strong feedback from around the firm. Many love it. Some don’t. Few are neutral. With a firm of 30,000 smart people, there are going to be lots of opinions…and that’s okay. I ask that you don’t get caught up in the colors and logo; these changes to our visual identity are simply what we think reflects the evolution that has taken place within our firm as we continue to build a relationship-based, value-driven culture.

You know this whole thing had to be incredibly controversial to inspire a bunch of accountants to get pressed about some pictures to the point they were writing strongly worded letters to top leadership about it.

Then there was the issue of destroying literal tons of letterhead and business cards to make way for new ones. At the time, PwC had around 236,000 employees in 157 countries. Of course not all of them had a large cache of PricewaterhouseCoopers business cards, even back then, but still. This was right around the time Big 4 firms were starting to pretend they cared about the environment.

There will be some costs associated with the change. In the US, they will include the cost of building signage and consumable items such as stationery, business cards and printed materials. Overall, this spend is minimal in relation to our size and is certainly not significant to our annual operating budget. If we treat the brand re-launch as an important opportunity to engage with our clients and each other–to discuss how together we will improve relationships and create value–the money we spend on the launch will be paid back many times over.

You have to remember this happened in 2010, about a year after the U.S. National Bureau of Economic Research declared the Great Recession over. So that was another concern.

With the economy just climbing out of a recession, why are we spending money on this change now?
A: Timing was clearly a consideration. We have set ambitious goals for our network of firms–and we are counting on our brand to work harder for us as we distinguish ourselves from our competitors. There will never be a better time to begin the transition to our new brand, and by starting now, we will be well-positioned as the economy improves.

OK that didn’t really answer the question. And the orange-sorta red-purple color scheme intended to improve client relationships, generate value, and other such corporate fart-huffing doesn’t seem to be helping to generate business in the current day deal slowdown.

Ad Age said McCann will be launching a creative platform for PwC in collaboration with “brand-led business transformation company” FutureBrand later this year. FutureBrand are the ones who gave a redesigned Nesquik rabbit to the world (along with adding unnecessary jizz milk squirts to the Nesquik name) so we’re looking forward to seeing what unnecessary 3D Blender animations they bring to the traditionally 2D world of professional services.

The post Is PwC Cooking Up Another Big Rebranding? appeared first on Going Concern.

Announced earlier this week, CliftonLarsonAllen has signed a 16-year lease for training space at the Viking Lakes Campus in Eagan, Minnesota just 20 minutes outside of Minneapolis. The new “connection center” is expected to open next year.

CLA, which has more than 130 offices across the country, including the US Bank Building in downtown Minneapolis, intends to use the space at Viking Lakes Campus for a connection center. The approximately 40,000-square-foot office footprint will be built out over the next year. Once complete, CLA team members from across the region and country will gather at the site for learning and development, ongoing training, team building and more.

[skipping the corny quote]

CLA will be investing $10M for a dedicated connection center within the Viking Lakes campus where it will host hundreds of the firm’s team members from across the country in learning programs, skills building courses, and leadership development initiatives. The firm also intends to hold client events and team building activities at the site. RSP Architects and ICRAVE have been engaged to design the space, which is expected to open in 2025.

Ah, so CLA University then. Let’s just hope the food is good, competition for the best brainwashing compound grub is stiff and Deloitte is hard to beat.

The entire property is 200 acres with more than two million square feet of professional and medical offices, 160,000 sq ft of retail, up to 1,000 multi-family units and 320 hotel rooms.

Minnesota Vikings owner Mark Wilf, whose family owns the property, is so excited to have CLA on the grounds that he started making up words. “CLA is a well-known, well-respected firm not just in Minnesota but across the United States,” he said. “The organization’s commitment to create a connection center on the Viking Lakes campus that allows their talent to ideate, learn and develop as professionals is a significant testament to what we are building in Eagan. CLA is a tremendous addition to our growing roster of strategic partners at Viking Lakes.”

Yeah sure, he said that.

Since 2018 Twin Cities Orthopedics Performance Center pictured in the upper left above is home to Vikings training camp meaning it’s entirely possible CLA staff could bump into some honest-to-god football players (or just swing by the Vikings Museum). We tried to include a sweet video of the training camp facility here but the team blocked it from being embedded on websites so here.

CLA CEO Jen Leary said the firm “has a long and deep history in Minnesota” so investing in this “connection center” is a “natural extension” of their commitment to the area. “We are thrilled to be taking this step and we cannot wait to welcome our clients and our people to this spectacular setting,” she said.

CLA Signs 16-Year Lease in Viking Lakes Campus [CLA]

The post CLA Staff Might See Actual Celebrities at Their New Training Campus in Minnesota appeared first on Going Concern.

According to the press release, Baker Tilly has doubled its workforce in the past five years and the deal will help them continue to grow in all the ways a large accounting firm can.

The significant investment from H&F and Valeas provides the firm with access to additional capital and capabilities to accelerate growth through investments in talent, technology and further strategic acquisitions directed at providing best-in-class client services.

As part of this transaction, the firm will be restructured as two entities: Baker Tilly Advisory Group, LP will provide the firm’s business advisory, tax and other services with Jeff Ferro continuing in his role as CEO. Baker Tilly US, LLP, a licensed CPA firm, will provide the firm’s attest services, with Jere Shawver, Managing Partner – Risk and Assurance, stepping into the new role of CEO. Baker Tilly US, LLP will operate as a separate legal entity pursuant to regulatory and independence requirements. Following the restructuring, both firms will remain partnerships, with all partners holding equity alongside H&F and Valeas in Baker Tilly Advisory Group, LP.

The rest of the press release is just a bunch of quotes from the people at the heart of this deal, we can skip those.

The transaction numbers were not shared publicly though Financial Times found a drippy sieve to get details from:

A person familiar with its deal said that the two private equity firms would take an equity stake of about $1bn for just over 50 per cent of the firm, with more than $900mn coming from H&F. There will also be an undisclosed amount of debt financing provided by a group of private lenders including Blackstone Credit, HPS Investment Partners and Blue Owl Capital.

The money will predominantly be used to buy out retirement obligations to former partners and return capital to its 600 current partners, as well as to recapitalise the balance sheet and build a war chest for mergers and acquisitions.

Allan D. Koltin, CEO of Koltin Consulting Group, who provided counsel to Baker Tilly and Hellman & Friedman throughout the process said, “This investment is a huge step for Baker Tilly, and it will certainly put the firm in a strong position to lead the consolidation of the public accounting industry.”

Not to brag about being clairvoyant or anything but we sorta saw this coming last year. Get ready for a very flashy merger ahead.

The post Baker Tilly Just Did a Massive Private Equity Deal appeared first on Going Concern.

RSM, the leading provider of assurance, tax and consulting services to middle-market businesses, has today announced worldwide revenues of US$9.4* billion for the 12 months to December 2023, a year-on-year growth of 16%.

It seems they forgot to define the asterisk as there is no corresponding footnote explaining why it’s there. Whoopsie.

Their press release bullet points as follows:

• Double-digit growth in five RSM regions for third successive year
• RSM headcount worldwide increases by 13% to 64,000
• RSM’s global brand re-energised to better support RSM’s strategic direction
• Global tech and digital investment increased four-fold.

Last year, the headcount was up 10% to 57,000 professionals and they were thrilled to report global revenues were up over 41% in three years.

Fee income in USD and increase from last year by service line:

• Audit: $3.6 billion (+13%)
• Tax: $2.6 billion (+17%)
• Consulting: $3.1 billion (+17%)

RSM had single-digit growth in tax and audit in 2022 (8% and 6% respectively) so that’s a healthy jump. 2022 global fees from consulting grew by 37% so the growth has slowed but still strong.

All regions showed impressive growth. Europe grew by 36% compared to 2022 as a result of sustained development across 33 Member Firms and the addition of RSM Ebner Stolz in Germany. North America, RSM’s largest region by revenue, saw an impressive 13% rise in fee income for the latest financial year, powered by significant growth in both tax and consulting services, particularly in relation to IT and ESG consulting. A strategic merger in South Africa in July 2023 coupled with overall progress across the region contributed to a 29% leap in revenue from Africa over the period. Exceptional growth was also recorded for both the MENA region, with a 30% increase on 2022, and Latin America, with an increase of 18%. Representing more than US$1bn in fee income, the Asia Pacific region grew by a strong 8%.

RSM US reported $3.7 billion in 2023 revenue back in August.

The rest of the press release is the usual self-fellating trash. Choice quotes include:

RSM has established the critical building blocks for ongoing growth, transformation and change, focusing on four Strategic Drivers – People, Clients, Technology and Solutions

RSM is dedicated to developing an unrivalled, inclusive culture and talent experience, believing investment in both people and technology to be critical to sustained growth and delivering rich, personalised client experiences.

Jean Stephens, CEO of RSM International, said: “With an emphasis on the generation and sharing of insight, streamlining the efficiencies and effectiveness of service provision and building connectivity through an enhanced global digital infrastructure, RSM is focused on providing innovative and valuable human insights powered by technology.”

Yeah whatever. Congrats to them on a fabulous year.

The post RSM Reports Double-Digit Growth and Record Global Revenue of $9.4 Billion appeared first on Going Concern.

As if public accountants didn’t have enough to worry about, local WLNS of Lansing, Michigan reported today that an accounting firm employee had apparently put ‘unauthorized’ software on colleagues’ phones and laptops. Why? No one knows. Or if they do, they aren’t saying.

The firm involved is Maner Costerisan, a joint you’ve probably never heard of unless you call Lansing home or memorized Accounting Today‘s 2023 Best Firms for Young Accountants list on which the firm ranked #9 due to the following stats:

HQ: Lansing, Mich.
Staff: 168 167
No. of staff under 30: 63
Percent of staff under 30: 38
Percent of voluntary turnover: 9
Days off: 20
Paid holidays: 8

WLNS:

Maner Costerisan President Trey Williams confirmed with 6 News Tuesday the accounting firm “learned of a potential breach of some employees’ private information via personal mobile devices and isolated instances in which unauthorized software was installed on employees’ laptops, we immediately investigated.”

What software?? And why? The firm’s president declined to say, saying only the matter was ‘sensitive.’ “While we remain aware of no misuse of any employee’s financial information or information related to identity theft, we made available credit protection/monitoring services,” said Williams’ statement to the news. “We are both angry and sorry this occurred,” he added. “Our employees’ security is of utmost concern.”

Obviously the person who (allegedly) did this no longer works there. The matter has been handed to the Michigan State Police who are investigating.

Checking Google reviews for aggrieved ex-employees slandering their former employer (as one does), we found this:

According to WLNS, the firm told staff in August shortly after they learned of the breach in July that no client information was involved “based on what we know now.”

Let you know if we hear more. If you are privy to additional details, reach out.

The post What Data Was This Weirdo Staff Trying to Steal From Colleagues’ Phones and Laptops? appeared first on Going Concern.

We haven’t heard anything similar coming out of the UK but according to recent reporting by FT, Grant Thornton UK is definitely dipping out on certain clients.

Grant Thornton has been relegated from the UK regulator’s top tier of audit supervision after the firm cut its number of high profile clients, removing more than 70 per cent of those in the “public interest” category, which includes listed companies, credit institutions and insurers.

The Financial Reporting Council industry watchdog moved the UK’s sixth-largest accounting firm from “tier one” to “tier two” supervision status last year, according to regulatory filings.

It means the watchdog will only conduct inspections of the firm’s “public interest entity” audits every three years, rather than every 12 months.

Grant Thornton cut the number of PIEs it audits by more than 70 per cent between 2016 and 2022, auditing 20 of them in 2022, while rival BDO had 217 PIE clients during the same period.

The are, or were, seven firms in the FRC’s top tier: BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars, and PwC. Their 2023 supervision reports are here if you’re going to be stuck on the can this afternoon. Said FRC in its July 2023 Tier 1 review [PDF]:

Of the audits inspected, 77% were categorised as good or limited improvements required (2021/22: 75%). Over the last four years we have seen a 10% increase in this key measure of audit quality (2019/20: 67%). We reviewed 100 individual audits (2021/22: 96) across the seven Tier 11, firms this year.

Six of the seven firms have improved or maintained their audit quality results, with at least the same percentage of inspections requiring no more than limited improvements. It is particularly encouraging that five of the firms had no audits requiring significant improvements, with the number of audits requiring significant improvement having reduced to 3% (2021/22: 7%).

The FTSE 100 audits are often the most complex entities and, of the 16 audits inspected, none were identified as requiring significant improvements. The percentage requiring no more than limited improvements was 81%, which is higher than the 77% across all audits. Of the 27 FTSE 250 audits we reviewed this year, we assessed 22 (82%) as achieving this standard.

Following a re-evaluation of all firms that fall within the scope of our supervision, we have re-allocated several firms within our tier system. This includes Grant Thornton UK LLP who, effective May 2023, are now included within Tier 2.

Good for them. Seriously, good for them.

In its last FRC inspection report [PDF], GT actually got good marks compared to the recent past, due in part to this shedding of problematic (for them) clients. Said the FRC:

In our 2021/22 public report, we concluded that Grant Thornton had continued to respond positively and make good progress on actions to address previous findings in relation to its audit execution and firm-wide procedures.

We are pleased that the firm has maintained its focus on audit quality and for the second year in a row, 100% of the audits inspected were assessed as good or limited improvements required. These are very positive results and form part of a three year trend of improved inspection results compared to the 2019/20 and 2018/19 inspection cycles.

The firm’s concerted effort and progress to improve audit quality continues to be very encouraging and we have seen improvements in the underlying culture, systems and processes that support audit quality. Never-the-less, to put these inspection results into perspective, there are likely to be other factors that have also contributed, such as our small sample size (to reflect the number of audits within the scope of the FRC) and the firm’s approach of de-risking its audit portfolio.

We can’t even rag on them for this, it’s a smart move.

The post Grant Thornton Gets Downgraded to a Tier 2 Firm, That’s Probably a Good Thing appeared first on Going Concern.

Hey, it’s the first partner promotions of 2024! Moss Adams announced via press release on Monday that 20 of its people successfully made the long crawl up the ladder to make partner. The class of 2024 is 44% smaller than that of 2023 when 36 people at Moss Adams earned their stripes. “The new class of partners and directors comes after another year of growth as Moss Adams expanded and augmented its services,” said the firm.

Moss Adams ranked #14 on the most recent INSIDE Public Accounting Top Howevermany list with $1.1 billion in revenue, up from $955 million in 2022.

The requisite self-fellating news release quote:

“For over 100 years, we’ve supported organizations as businesses advisors and accountants,” said Eric Miles, chairman and CEO of Moss Adams. “The accounting profession continues to evolve as business needs change. The skillset and breadth of experience within this group of new partners and directors represents the evolution of the profession. The future is bright for Moss Adams.”

Let’s tone it down a little, Eric.

The new partners are:

Irina Antonache (Portland, Ore., Tax Credits & Incentive Services). Antonache manages federal and state tax consulting and compliance matters related to incentives for renewable energy development.

Sam Battle (San Francisco, Calif., Real Estate Practice). Battle provides assurance services to clients in the real estate industry, including real estate funds, public non-traded real estate investment trusts, investment companies, and property management companies.

Lisa Dion (Seattle, Wash., Technology Practice). Dion provides audit, review and attest services to public and private companies in a variety of industries including technology and life sciences, government, not-for-profit, hospitality and corporate social responsibility.

Jeff Driesen (San Francisco, Calif., International Tax Services). Driesen consults with clients on various aspects of international tax, providing both technical and practical advice as companies look to expand and operate globally.

Breanne Eagles (Medford, Ore., Automotive & Dealer Services Practice). Eagles supports a diverse range of businesses, delivering tax and consulting services that include tax compliance and planning, transaction structuring, buy-sell assistance and family ownership transitions.

Nick Fusca (Orange County, Calif., Financial Services Practice). Fusca performs first-year audits, multiyear audits and multiyear restatements for companies in the specialty finance, retail, real estate, manufacturing and distribution, construction, consumer products and professional services industries.

Nicholas Hansen (Santa Rosa, Calif., Manufacturing & Consumer Products Practice). Hansen provides assurance services to clients in the manufacturing and consumer products, food and beverage, and agribusiness industries, and is also well-versed in performing employee benefit plan audits.

Pat Hoppa (Kansas City, Communications & Media Practice). Hoppa provides tax compliance and planning services to clients in a variety of industries, including private equity, construction, communications and media, real estate and manufacturing and consumer products.

Mo Huda (Dallas, Texas, State & Local Tax Services). Huda assists clients in various industries with a focus on sales and use tax compliance, tax technology-related initiatives, sales tax implications on mergers and acquisitions, voluntary disclosure programs, nexus and taxability studies.

Chris Hughes (San Francisco, Calif., Financial Services Practice). Hughes provides financial statement audit services for various financial institutions, primary mortgage companies, public and privately held community banks, credit unions and other specialty lenders.

Kyle Krzyznieski (Spokane, Wash., Financial Services Practice). Krzyznieski manages financial statement audits and consulting engagements for publicly traded and privately held companies in the financial services industry.

Jeff Norman (Dallas, Texas, Health Care Consulting Services). Norman is responsible for managing relationships with hospitals and health system organizations nationally and primarily focuses on provider reimbursement enterprise solutions within the firm’s full suite of health care services.

Kyle Pennington (Dallas, Texas, Health Care Consulting Services). Pennington manages crucial relationships with client hospitals and major corporate hospital systems, offering client-focused guidance around growth and provider reimbursement enterprise solutions.

Ryan Petrucelli (San Francisco, Calif., Due Diligence Services). Petrucelli advises private equity and corporate clients on mergers, acquisitions and divestitures. He performs buy-side and sell-side financial due diligence, including quality of earnings and quality of revenue analysis, net working capital analysis and financial modeling.

Jesse Proctor (Tacoma, Wash., Transportation & Logistics Practice). Proctor provides corporate audit, review, transaction, and consulting services for public, private equity-backed and private entities with a focus on the transportation and logistics industries.

Ayman Soliman (Orange County, Calif., Construction Practice). Soliman delivers assurance and consulting services to middle-market clients in the construction, professional services, and manufacturing and consumer products industries.

Kyle Sund (Portland, Ore., Tax Credits & Incentive Services). Sund assists clients with asset-related tax planning and helps them assess the impact of tangible property regulations on their business.

Lisa Swartos (Seattle, Wash., Real Estate Practice). Swartos advises real estate clients in all phases of audits, reviews and other attestation engagements, as well as in employee benefit plans.

Angie Vannatta (San Diego, Calif., Real Estate Practice). Vannatta provides tax compliance and planning services to closely held businesses and individuals, strongly focusing on family-owned real estate.

Lu Zhang (Silicon Valley, Calif., International Tax Services). Zhang provides international inbound and outbound tax planning and consulting for multinational companies, with a focus on cross-border investment, mergers and acquisitions, supply chain design, tax treaty analysis and transfer pricing planning.

In addition to 20 partners, the firm also added five managing directors and one executive director:

Sharon Glenn (Seattle, Wash., General Counsel). Glenn provides strategic input to executive leadership, manages the firm’s legal department, and oversees a wide variety of legal matters.

Shane Griffiths (Seattle, Wash., State & Local Tax Services). Griffiths primarily assists public and privately held clients with state and local tax matters—audits, refund requests, tax planning and structuring, and letter rulings—and provides insight on multistate income and franchise tax.

Michael Chmelik (Denver, Colo., M&A Tax Services). Chmelik focuses on the planning, structuring and modeling related to partnership formations, restructurings, acquisitions and dispositions of interests, and allocations.

Stephanie Melton (Albuquerque, N.M., Private Clients Practice). Melton works in all areas of tax preparation and primarily focuses on individual, estate and trust preparation and planning.

Gus Mesmer (Seattle, Wash., Tax Services). Mesmer oversees the firm’s selection and implementation of tax technologies, design of tax processes, and their impacts on risk management.

Jose Romero (Seattle, Wash., M&A Tax Services). Romero advises and represents corporate and private equity clients in a variety of tax matters related to corporate transactions.

Congratulations to all, you made it!

The post Promotion Watch ’24: Moss Adams Adds 20 Partners to the Roll appeared first on Going Concern.

The $3.7bn-in-revenue firm had no need to bring in private capital to fund expansion or to allow partners to cash out early, he said, and he expressed scepticism about the business models being pursued by US rivals.

“We deal with private equity a lot and their goal is to get a return on their investment,” he said. “You have to realise that, when you take that type of capital.”

It was only a little more than two years ago that EisnerAmper became the first top 20 accounting firm to bring private equity into the mix. Since then, “private-equity investors have been buying their way into the world of accounting, planning, and advisory services” or so Journal of Accountancy wrote in February 2023. “The profession has been moving toward consolidation for a lot of years now. The pressure and intensity on mergers have been growing for the last four or five years. This is a continuation of the trend,” said Charly Weinstein, CEO of Eisner Advisory Group LLC, for that JofA piece.

We expect the next five years to be awash with private equity cash (and perhaps some scandals to follow as firm ownership slips out of the hands of CPAs) as more boomers retire en masse and talent-strapped firms combine forces to better compete. Someone mentioned the private equity trend in our open survey on issues affecting the profession in 2024, writing that the future of the profession “actually existing vs it all being PE owned and for tax and consulting” is a conversation that needs to be had.

Anyway, RSM. Becker referenced RSM’s past as a reason he wants to keep RSM in the hands of its owners.

Becker cited RSM’s own history as a reason for not wanting to follow suit. For 12 years until 2011, the firm — then known as RSM McGladrey — was part of the publicly listed tax preparer H&R Block.

“It made us into a national firm, which was great. Not so great is that [owners] look for an exit. We don’t want to be put in the position where we are trying to drive [earnings] after a certain period of time.”

The firm’s history is actually interesting. And a bit messy. In 2011, H&R Block sold RSM McGladrey to McGladrey & Pullen. Oddly, then-managing partner at McGladrey & Pullen Dave Scudder said in 2009 the “operational and financial model” with H&R Block that had been in place since 1999 “wasn’t working and “does not serve us well as we address our future goals of client service, opportunity for our partners, and continued growth.” See? Messy. That happens when you start chopping firms into pieces and passing them around.

Thing is, H&R Block later said it was RSM McGladrey that was a drag. You’re not breaking up with me, I’m breaking up with you!

Wrote Going Concern founding editor Caleb Newquist of the RSM McGladrey trade in August 2011:

This morning we learned that H&R Block would be selling RSM McGladrey to McGladrey & Pullen for $610 million. This reunion of the two firms is interesting because just a couple of years ago they couldn’t stand the sight of one another. These days, you might conclude that since they opted to rebrand under the name “McGladrey” that everyone has kissed and made up but we all know better. In all likelihood, there are partners on both sides who would rather set their CPA certificates on fire than work with the other side. The problem for the partners in these firms is that they probably had little choice in the matter, as H&RB seemed intent on cutting off the weak link:

[T]he top U.S. tax preparer looks to jettison the underperforming division and focus on its core business. H&R Block will finance about $65 million of the deal value as it looks to push through the sale of RSM McGladrey. […] In June, H&R Block’s new Chief Executive William Cobb told analysts that RSM’s falling profit and revenue were a drag on the company’s earnings, and that the unit and its troubles were on his “radar screen.” “(The sale) should improve overall corporate margin, as Tax Services margin in FY11 was 27.1 percent and RSM McGladrey’s was 9.3 percent,” Oppenheimer analyst Scott Schneeberger said in a note to clients.

“H&R Block Was Pretty Eager to Dump RSM McGladrey,” Going Concern August 23, 2011

We’re going to need a heist board to keep all this straight. Or Wikipedia.

No wonder Brian Becker wants to avoid messy dealings with outsiders.

He also said RSM won’t be copying BDO’s ESOP either. “Any strategy that is dependent on saving taxes can be very short lived,” he told FT. “We don’t need capital and we don’t need a method to distribute income any differently.”

We get it, Brian, RSM has money. Even with nearly $4 billion in revenue the firm is quite a bit behind smallest Big 4 firm KPMG but secure in its place as the fifth largest firm for now. We hear FORVIS is gunning for them hard, they might want to keep their options open.

RSM rules out radical changes to accounting partnership model [Financial Times]

The post Sorry, Private Equity, RSM Doesn’t Want Your Money appeared first on Going Concern.

Tip:

All offices are working remotely with severely limited access to normal functions and systems. All internet has been turned off at the offices worldwide. Down for a couple of days now.

They’re very serious, you guys. In an email with a handy visual of the firm’s docking stations the firm says:

It is CRITICAL that you DO NOT MAKE ANY ATTEMPT TO CONNECT TO THE CohnReznick NETWORK.

DO NOT REDEEM.

DO NOT REDEEM!!

According to another internal email we’ve reviewed, the firm detected unusual activity on the network and took the network servers offline “to protect our information.” There is currently no indication that client or employee data has been compromised.

The email from the office of People and Culture also gave a list of work-related activities for employees to consider while the network is down including:

• CPA and Learning and Development via LINC, LinkedIn Learning, etc
• Snapshot review, goal setting and coaching meetings
• Mid-year review documentation and meetings
• Engagement planning or budget managements
• Client work that can be done with desktop such as excel schedules word doc memos etc

Gaming and Netflix it is, then.

So what do we think? Partner clicked a link in a sketchy email? Some idiot downloaded GTAVIfullgame.exe from a dubious website on the office internet? We’ll let you know if we hear more.

The post Ruh-Oh, Something Bad Happened to CohnReznick’s Network (Allegedly) appeared first on Going Concern.

INSIDE Public Accounting Top 300 firm BST & Co. of New York (#278, revenue of $16,244,850) has finally had enough of 79-year-old Rudy Giuliani allegedly dodging their bill and is now suing him for $25,000 in Albany state Supreme Court. See: Lawsuit says Rudy Giuliani stiffed Colonie accounting firm out of $10K published today by Times Union.

According to various outlets, the former mayor of New York City retained BST in 2018 for financial consulting related to his divorce from third wife Judith Giuliani (Nathan). The divorce was a contentious one as divorces so often are, we don’t need to get into the salacious details.

According to the lawsuit, the firm sent multiple friendly reminders over the past five years, all of which were ignored by “America’s Mayor.” The language BST used in their attempt to collect the debt was pure poetry: “It is not our desire to undertake such a distasteful course of action and we have been patient to this point, but your continued disregard of your obligation to this firm can no longer be tolerated,” said the firm in its second demand letter. “We thank you in advance for your immediate attention to this matter.”

Wrote Daily Beast, partners’ billable rates were between $410 and $575, senior managers $335 to $400, managers and senior analysts at $185 to $275. The firm also billed for “other department staff” at $100 to $180.

One detailed invoice from BST shows how three accountants and one fraud examiner at the firm combed through Giuliani’s finances beginning in November 2019, together racking up 42 hours of work over a few weeks while they reviewed a year’s worth of American Express bills, examined 15-year-old tax returns, and scrutinized the assets he had shortly after leaving the mayor’s office. That invoice showed that Giuliani was already behind by $36,125, and the additional work jacked up the total bill to $50,833.

Rudy Giuliani Dragged Into Court Again Over a Measly $10K, Daily Beast, November 21, 2023

In September the IRS placed a lien on Giuliani’s Palm Beach, Florida penthouse over the $549,435.26 in federal taxes they say he owes for 2021 though his spokesperson claims there’s a conspiracy related to his drama with President Biden. “Mayor Giuliani is suing Joe Biden for defamation, and I get asked about a potential tax issue. You just can’t make this stuff up,” said spokesman Ted Goodman in a statement. “Giuliani, through his accountant, has a formal agreement with the IRS to pay off the liability.”

Hopefully that is a different accountant.

And then there’s this:

A biographer of Rudy Giuliani said the former New York mayor’s many legal woes and profligate spending have left him “penniless”

On Tuesday, Giuliani’s former lawyer and longtime friend Robert Costello sued him over alleged unpaid legal fees totaling $1.36 million stemming from various cases. The ex-mayor is currently under indictment in Georgia over his efforts to overturn the 2020 presidential election in the state in favor of Donald Trump. Giuliani is also awaiting a civil trial in which a jury will decide how much he has to pay two election workers he defamed.

“Biographer Says Giuliani Is ‘Penniless’ After Legal Fees and Spending $250,000 a Month On ‘Fun’,” Mediaite, September 19, 2023

Sorry, BST, looks like you’re going to have to get in line.

The post BST & Co. Got Sick of Hounding Rudy Giuliani to Pay His Bill So Now They’re Suing Him appeared first on Going Concern.

Fresh off the rumor mill via the tip box:

Forvis, in its laughable quest for global domination (WE DONT WANT TO BE THE BIG 4), is going to announce another merger/acquisition this week, presumably to leapfrog GT and BDO in the Americas or establish significant footing overseas.

FORV/S (ugh why’d I type that) currently sits at #8 on the IPA Top 100 with $1.7 billion in revenue. BDO and GT are at #6 and #7 with $2.8 billion and $2.3 billion in revenue, respectively. Going by the IPA numbers that means a $1.1  billion difference between FORVIS and BDO, merging with any of the top 9-15 firms would get them there by next year. Those firms are:

Well we can immediately disqualify CLA — our tipster did — for a few reasons (and not our tipster’s reason of FORVIS having no respect for them): After identifying a few cases of CLA declining reappointment as auditor for some clients, we confirmed CLA is 100% pulling out of the public company audit game along with a few other mid-tiers. FORVIS picked a few of these clients up (that we know of, probably more) so it makes no sense that they’d end up back where they were. CLA CEO Jen Leary also said this in a recent Bloomberg Tax interview:

With no new acquisitions on the horizon, Leary said she is focused on improving the value of the enterprise for the next generation of CLA owners. Partnering with private equity, as other firms have done, isn’t in the cards. “We don’t need outside capital,” she said.

Our tipster seems to think the merger will be an international one. This June 2023 Charlotte Business Journal profile on post-merger DHG and BKD plans seems to back that up:

The first name that comes to mind when one thinks about international firms is Mazars but that “would be shocking,” said our tipster. Mazars USA (IPA 100 #31, $258 million in revenue) and Le Mazars are both fellow members of the Praxity alliance Forvis is in, as are Moss Adams and Plante Moran. The bulk of Praxity firms are overseas (to us) excepting Toronto’s MNP which requires no sea travel to get to from Springfield, Missouri.

If you remember, we’ve been through this before with FORVIS (before there was a FORVIS). In February 2022 a tipster told us two big Praxity firms were about to announce a merger. At that time, we had these to choose from:

• Aronson
• BKD
• Dixon Hughes Goodman
• Kaufman Rossin
• Mazars USA
• Moss Adams
• Plante Moran

We of course know now that it was BKD and DHG that combined forces to become the horribly named FORVIS. BKD and DHG were in the 14th and 17th spots (respectively) on the IPA 100 in 2021, the FORVIS merger bumped them up together to #8 in 2022.

Our tipster suggests that if it is a US firm, that firm will be Moss Adams though it seems unlikely. We’re told there should be an internal announcement this week, hopefully we haven’t totally ruined it with this post.

Speculate away and let’s get the jump on offering GOOD possible post-merger name ideas to prevent another FORVIS ok?

Update (11.14): First off, you people in the comments are wild. Thanks for that. Can you all please pick a commenter name though? All the Anonymice are confusing.

As some suspected, the FORVIS merger is a union with Mazars. Here’s the kicker — we’re told FORVIS will be “absorbing” Mazars USA (IPA Top 100 #31, $258 million in revenue) and merging but not merging with the real Mazars (revenue €2.45 billion, approximately $2.7 billion USD). Once things are official on June 1, 2024 the firms will operate as FORVIS Mazars (wasn’t it hard enough to explain what “FORVIS” means to Americans??) and eventually drop the Mazars after 18 months, per our tipster.

The official announcement should be dropped tomorrow, November 15 in an 8am webcast. [Ed. note: *to employees. Someone in the comments seemed to think this was to be a public one]

One other thing of note, it’s our understanding that this play has been in the works at least since the DHG/BKD merger and that the creation of FORVIS was just one step in a three-year plan. It sounds like FORVIS will be setting its sights on new markets as soon as the ink is dry on the Mazars deal. Finally, we understand what they meant by FORWARD VISION. More on that later.

Update (11.15): Financial Times published a story this morning.

The post There Might Be a Big Merger in the Works For FORVIS (UPDATE) appeared first on Going Concern.

Here’s what happened: Ontario public accounting licensing body CPA Ontario reached an out-of-court settlement with Marcum LLP resolving allegations of multiple instances of US Marcum partners performing work in Ontario — including issuer audits — without said partners being licensed to practice in the province. Thus concludes CPA Ontario’s investigation and prosecution of offences under the Chartered Professional Accountants of Ontario Act, 2017, and the Public Accounting Act, 2004.

A Public Accounting License (PAL as in “Who you calling PAL, friend?!“) is required by CPA Ontario if you:

• practice public accounting as described in section 2 of the Public Accounting Act and are the lead engagement person responsible for signing reports or statements regarding:
  • assurance engagement (including an audit or review engagement) relating to a financial statement or any part of a financial statement or any statement attached to a financial statement
  • any compilation engagement in respect of which it can be reasonably expected that the services will be relied upon or used by a third party and the prescribed wording for the Compilation Engagement Report is not used

You do NOT need a PAL if:

• are not the lead engagement person responsible for signing the report or statement (members of the engagement team who are not the lead engagement person, including the quality control review partner, are not required to be licensed)
• do not provide any assurance services (including audit or review engagements) but do provide other services including:
  • compilations in which the services may be relied upon or used by a third party and the prescribed wording for the Compilation Engagement Report is used
  • taxation
  • accounting
  • internal audit
  • controllership
  • insolvency services
  • business advisory services

The settlement cost Marcum $1.2 million CDN (approx. $877,300 USD) of which $1 million went to the Ontario Government and $200,000 went to CPA Ontario to cover costs of investigation and prosecution.

This wasn’t the first time Marcum got reprimanded by the Canucks this year. The Canadian Public Accountability Board (their version of the PCAOB) censured Marcum earlier this year, prohibiting the firm from taking on new “high risk” clients in Canada, including those clients resulting from initial public offerings, reverse takeovers, or other transactions. Canadian Accountant on the March 2023 enforcement action, the CPAB’s first of 2023:

CPAB inspected two of Marcum’s audit files in 2022 and identified nine significant inspection findings. Each of the deficiencies represents a breach of one or more professional standards and constitutes a “violation event.” CPAB does not specify the findings, only the breaches of nine Canadian auditing standards, and the Canadian Standard on Quality Control 1 (CSQM 1), which is adapted from International Standards on Auditing. Also, the firm was not registered or licensed by the relevant provincial CPA body to perform audits of the financial statements in the respective jurisdiction.

It is an unusual and rare censure by CPAB. Unusual because the limited information provided may lead some to speculate that the accounting firm was not using Canadian audit standards at all in the engagements inspected by CPAB. Rare because CPAB has averaged just one public censure per year in the last two years.

The CPAB violations [PDF] involved breaches of the following Canadian Auditing Standards (CAS):

i. CAS 230, Audit Documentation.
ii. CAS 250, Consideration of Laws and Regulations in an Audit of Financial Statements.
iii. CAS 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment.
iv. CAS 330, The Auditor’s Responses to Assessed Risks.
v. CAS 402, Audit Considerations Relating to an Entity using a Service Organization.
vi. CAS 500, Audit Evidence.
vii. CAS 520, Analytical Procedures.
viii. CAS 530, Audit Sampling.
ix. CAS 701, Communicating Key Audit Matters in the Independent Auditor’s Report.
x. Canadian Standard on Quality Control 1 – quality control for firms that perform audits and reviews of financial statements, and other assurance engagements.

“CPA Ontario’s mandate is to protect the public and uphold the high standards of the CPA profession in the province. Unregistered and unlicensed foreign accounting firms operating in Ontario do so without the critical regulatory oversight that ensures public protection and confidence in public accounting,” said Janet Gillies, CPA, CA, executive vice-president, Regulatory and Standards, CPA Ontario. “This settlement underscores that foreign accounting firms must comply with CPA Ontario’s regulatory requirements if they wish to practice in the province.”

Don’t mess with Canada!

The post Marcum Didn’t Let a Little License to Practice Stand in the Way of Providing Professional Services in Ontario appeared first on Going Concern.

From the SEC:

The Securities and Exchange Commission today announced charges against accounting firm Prager Metis CPAs, LLC and its California professional services firm, Prager Metis CPAs LLP, (together, Prager) for violating auditor independence rules and for aiding and abetting their clients’ violations of federal securities laws.

According to the SEC’s complaint, between approximately December 2017 and October 2020, Prager improperly included indemnification provisions in engagement letters for more than 200 audits, reviews, and exams. As a result, the complaint alleges, Prager was not independent from its clients for those engagements, as required under the federal securities laws. The SEC alleges that Prager continued to sign engagement letters containing indemnification provisions and also issued “accountant’s reports” in which it purported to be independent in connection with its audits and exams, even after Prager’s senior partners repeatedly were notified that inclusion of indemnification provisions in engagement letters rendered Prager not independent. Many of Prager’s clients included those “accountant’s reports” in their filings with the SEC. Prager allegedly also failed to advise its clients of its violations, even after the Public Company Accounting Oversight Board informed Prager that the indemnification provisions violated the independence requirements of the federal securities laws.

Alleges the SEC:

Prager Metis CPAs, LLC and its California professional services firm, Prager Metis CPAs LLP, failed to comply with the Commission’s auditor independence rule in connection with 62 audits, 11 examinations, and 144 reviews, conducted pursuant to 87 engagement letters dated from in or around December 11, 2017 to in or around October 28, 2020. Prager’s auditor independence violations in connection with these engagements affected 62 “SEC Registrant Clients,” comprised of 54 public issuers, 4 registered broker-dealers, and 4 registered investment advisers, from which Defendants collectively earned more than $3,000,000 in fees.

Defendants had been on notice of their independence impairment since at least early January 2019 when a new partner who recently had joined Prager raised the issue with senior Prager partners.

The complaint is brutal which is why I’m embedding it here for your reading pleasure. God speed to them.

SEC complaint against Prager Metis by Adrienne Gonzalez on Scribd

Related (?): If There Was a PCAOB In the Metaverse, It Would Probably Find a Bunch of Errors In Prager Metis’s Audits Too
Not related but funny: Prager Metis Just Spent $35k So They Can Service Clients In the Metaverse

The post Prager Metis Just Got Thoroughly Boned By the SEC For Hundreds of Independence Violations appeared first on Going Concern.

Chattanooga Times Free Press has written quite the story about legacy accounting firm Croft & Frost abruptly laying everyone off earlier this week after months of issues making payroll. Thanks to the tipsters who sent this over because holy shit.

According to emails seen by Chattanooga Times Free Press, the firm failed to pay its staff from May of this year until the firm closed down this past Tuesday. The email staff received on Tuesday announcing the firm’s closure cited “ongoing challenges and decline in our company’s financial performance.” Staff were told their overdue paychecks from August 11, August 25, and September 8 would be paid via direct deposit Friday.

Well let’s hope they don’t issue a press release about record-breaking revenues a few months from now like some firms like to do after layoffs. Something tells me that won’t be happening.

Croft & Frost’s former HR Director confirmed the closure on LinkedIn (and is also looking for a new job if anyone knows of any open HR positions):

It’s a sad day here in Chattanooga. CROFT & FROST has decided to shut it’s doors, which leaves a lot of really great employees without a job.

Recruiters – I can firsthand attest the entire team at C&F are the cream of the crop. If you are looking to hire any tax preparers, tax reviewers, client relationship staff, tax resolution staff, marketing staff, onboarding staff, IT staff, operations managers, business developers, etc. please consider these candidates first.

Special shout-out to Rocky Garza for being the best manager I have ever had the pleasure of working with. I’ll always look up to you and cherish the few months we had together.

And lastly, if anyone in my network is aware of any Human Resource positions, I am available for hire! Onward and upward!

CTFP says the trouble started showing in May when CEO Jonathan Frost — who has DFE’d all his social media — sent an email to employees saying the addition of 36 staff, several new product lines, and a new leadership team caused a “perfect storm” of issues. “When we make these changes as rapidly as we have, that will create a significant drain on cash flow,” the email said. “We will see more of the fruits of these changes over the next 6-12 months. Until then, we need to hold on and double down on our belief that we are moving in the right direction.” Rumors were flying within the firm that staff wouldn’t be paid so he was forced to address it two days after the mUh CaSH fLoW email. “There may be a slight delay on the payroll,” he said. “The only thing that can be guaranteed is that you will absolutely be compensated for all work performed, it may just be a few days late.” He also promised a bonus “as a sign of good faith” if people would just let the late paycheck thing go.

For the next three months leadership continued to send emails promising transparency and overdue paychecks. “As I am sure you have noticed, payroll today is delayed further,” said Frost in an email to staff on June 3. “However I believe we will have the funding next week and payroll will be released then.” Six days later he sent another email. “We will not be receiving payroll today,” he said, pledging that two overdue paychecks and bonuses would be paid out in a week. You can guess what happened next.

“I am writing to provide a clear and transparent update on payroll, for 7/14 and 7/28,” wrote HR at the end of July. “As you may know, we had anticipated receiving significant funds this week to cover several payrolls and stabilize our financial position. However, due to an unforeseen delay, we have yet to receive these funds. Let me assure you, the funds are coming. This situation is unfortunately beyond my control, as timing is everything with the amount of moving parts we have currently to get this fixed.”

Emails, and delays, continued through August. On September 8, HR once again told staff that “payrolls are ready to go as soon as the funds become available.” Everyone was laid off a few days later.

Our tipster tells us that the payroll issues have been going on since September 2022, not May of this year. We’ll be following up with someone who worked there shortly and will update accordingly.

A r/chattanooga discussion has more details from clients and ex-employees alike:

Croft and Frost ceases operations?
byu/Reasonable-Tailor918 inChattanooga

It’s not the first time the firm has been discussed on the local subreddit.

Is this JD Frost guy legit?
byu/_Maximum_thrust_ inChattanooga

Let’s not leave out Paul Croft, Founder & Executive Chairman of the dearly departed Croft & Frost because omg. From a bio on his website (saved on Scribd here):

Paul dreamed of earning a seven-figure income by the time he was forty, which became a reality at age thirty-seven. That dream became a reality due to establishing life-long relationships and enhancing the personal and financial goals of his clients. Paul’s unique ability to form these deep, impactful relationships has enriched his own personal and professional life in unimaginable ways. Paul’s main goal is to help the people around him grow personally, professionally, and financially through his life values and professional experience. Today Paul’s personal net worth is north of $700MM and he has goals of becoming a billionaire in the next year. Paul has high goals and expectations of himself but one of the things that drive him is to
inspire, provide wisdom, and share his experience for his employees and clients to also achieve higher levels of success.

In Paul’s free time, he enjoys spending time with his wife, son, family and friends, traveling, DJing (DJ PaulyC), and playing golf. Paul played hockey growing up, and he was ranked in the top 30 players in the state of Minnesota, North Dakota, and South Dakota (Minnkota) during his high school hockey career. Unfortunately, his Junior year he suffered from a traumatic back injury which did not stop him from being on the ice, but later discovered his passion for hockey had changed. Paul’s work ethic has proven to be the driver in all of his success, and his true passion for caring for others. Adding substantial value to people’s lives has led Paul to be a successful entrepreneur throughout his career.

His Insta, which boasts more than 2 million followers, is superconcentrated IV LinkedIn cringe.

Just to add some more flavor to a story that is already insane, Croft & Frost is headline sponsor of the 2nd annual Running Down Recidivism 5k run/walk taking place tomorrow September 16.

The Wix-based Croft & Frost website has been yanked as of press time. Any of Croft & Frost’s 70-some employees are welcome to reach out with horror stories as well as resumes if we can help connect you with a new job that actually pays. This story deserves some more digging, just wanted to get out what we have for now.

The post This Shady Chattanooga Accounting Firm Just Went Down in Flames and Still Owes Staff Months of Pay appeared first on Going Concern.

From today’s news release:

The Securities and Exchange Commission today charged Alfonse Gregory Giugliano, CPA, the former National Assurance Services Leader at Marcum LLP, a public accounting firm, with failing to sufficiently address and remediate numerous deficiencies in Marcum’s quality control system. The SEC previously charged Marcum for these quality control deficiencies and other violations, many of which were in connection with Marcum’s audit work for hundreds of special purpose acquisition companies (SPACs).

See: Marcum Took On Too Many Clients and Totally Wrecked Their Quality Control, Says the PCAOB in Disciplinary Order

Anyway:

According to the SEC’s order, Giugliano oversaw quality control for Marcum’s public company practice, including the firm’s relevant quality control policies, procedures, and monitoring, and directly or indirectly supervised all personnel working within Marcum’s quality control functions. The SEC’s order finds that exponential growth in Marcum’s public company practice exposed substantial deficiencies in these functions.

Moreover, according to the SEC’s order, Giugliano was aware that inspections by the Public Company Accounting Oversight Board (PCAOB) and by Marcum itself revealed numerous deficiencies in Marcum’s quality control system. The SEC’s order finds that Giugliano did not sufficiently address and remediate these deficiencies, leading to quality control and audit standard violations throughout Marcum’s audit work, such as client acceptance, engagement partner supervision and review, audit documentation, and technical consultations. In addition, under Giugliano’s leadership of Marcum’s quality control system, the firm did not sufficiently monitor the effectiveness of many policies and procedures and, in many areas, did not adequately communicate those policies and procedures to relevant personnel.

The SEC order has specifics:

In 2020 and 2021, over 860 SPACs completed initial public offerings (“IPOs”) in the United States. Over 400 of these SPAC IPOs were audited by Marcum. In 2019, Marcum had served as the auditor for only 185 public company issuers; by 2022, Marcum was responsible for auditing over three times that number—a total of 575 issuers, the majority of which were SPACs.

The strain of this exponential growth in Marcum’s public company practice exposed substantial, widespread, and pre-existing deficiencies in the Firm’s underlying quality control policies, procedures, and monitoring that Giugliano oversaw. Giugliano was aware that, in the period immediately preceding the SPAC market’s explosion, Marcum’s annual inspections by the PCAOB had revealed an increasing number of deficiencies.

Through his oversight, Giugliano was also aware that Marcum’s own internal inspections—starting at least in 2018 and continuing through 2021—also revealed deficiencies. Over several years, these inspections identified numerous deficiencies in audit documentation. The 2020 internal inspection also concluded that such deficiencies were caused by insufficient time spent on engagements and audit documentation. Despite inspection findings, Giugliano did not sufficiently address and timely remediate deficiencies in the Firm’s policies, procedures, and monitoring.

As king of assurance, he was aware that Marcum had insufficient policies and procedures related to the evaluation of personnel capacity. And he knew that the firm was having difficulty staffing engagements and making deadlines because of this. How did he know? The more appropriate question would be “how could he not?” At least as early as 2019, Giugliano was on notice that Marcum personnel frequently failed to sign off on certain work papers prior to the release of audit reports.

These difficulties and delays became especially apparent in the summer and fall of 2020, as Marcum’s monthly SPAC client acceptance figures increased from single-digit figures in June, to the mid-teens in July, to 29 clients per month, for three consecutive months in August, September, and October.

From as early as October 2020, Giugliano was aware of widespread failures in the timely completion, assembly, and retention of audit documentation. For example, Giugliano received weekly emails reflecting that the number of work paper binders that were not finalized and assembled for retention within the PCAOB-required 45-day period increased from 23 to 687 between October 2020 and June 2021.

Moreover, Giugliano was repeatedly notified of capacity constraints throughout the SPAC practice. At the beginning of February 2021, for example, a national office partner alerted Giugliano that managers in the SPAC practice were overworked and lacking resources. Nonetheless, over the course of February 2021, Marcum accepted a record 114 new SPAC clients. The same pattern of notifications and high client acceptances continued into March 2021, as the Firm accepted a record 159 new SPAC clients.

Greg: ¯\_(ツ)_/¯

He was previously sanctioned by the PCAOB in 2019 for substantially contributing to the firm’s independence violations, an event that marked the first time the PCAOB sanctioned an annually inspected firm’s head of independence for said substantial contributions. He is ironically a former member of the AICPA SEC Regulations Committee and his LinkedIn profile says he “has developed considerable expertise encompassing SEC regulations, accounting, auditing, business forecasting, international operations, mergers and acquisitions, due diligence, management consulting, and quality control.” And regulatory fines, apparently.

The SEC order finds that Giugliano engaged in improper professional conduct within the meaning of Section 4C(a)(2) of the Securities Exchange Act of 1934 and Rule 102(e) of the SEC’s Rules of Practice and that Giugliano caused Marcum to violate Rule 2-02(b)(1) of Regulation S-X. Without admitting or denying the SEC’s findings, Giugliano consented to cease and desist from committing or causing any violations and any future violations of Rule 2-02(b) of Regulation S-X and to pay a civil penalty of $75,000. Giugliano further agreed to a censure and to comply with certain undertakings for a period of three years, including having no leadership, management, oversight, or supervisory position at any registered public accounting firm.

The post The SEC Has Charged Marcum’s Former National Assurance Services Leader With Being Ass at His One Job appeared first on Going Concern.

We’ve received this tip a few times now from a few different people, time to throw it to dogs and see if anyone knows more. Here’s the original, slightly edited to protect anonymity:

Plante Moran, CBIZ, Marcum, Armanino, and a couple of other large public firms will no longer be serving public clients. It does look like CBIZ has left or is leaving the space. If the others are true, that’s a lot of free agent clients and probably a fair amount of pain for whoever picks them up.

Another tipster said CBIZ was trimming staff in audit “in connection with that” though we didn’t get any numbers because no one ever talks about CBIZ, you probably forgot they existed until just now. A couple others have confirmed they’ve heard about CBIZ pulling out but nothing solid. FWIW CBIZ was posting audit senior associate job openings on its website as recently as yesterday and an audit intern job posted today says interns will “assist in planning multiple audit assignments in Real Estate, Construction, Nonprofit, Manufacturing and many more industries.”

Per Ideagen Audit Analytics’ “Who Audits Public Companies” published in June, as of May 14, 2023 there were 258 firms conducting audits for 6,950 Securities and Exchange Commission registrants. As we already know, Big 4 dominates the large accelerated filers category.

The top ten firms collectively audit 68% of the total population. In comparison to our 2020, 2021, and 2022 analyses, this is the first year where the top ten audit firms remained static in terms of market concentration for SEC registrants. While the majority of the top ten firms managed to increase their clientele from 2022, Withum decreased in rank. They fell from sixth to ninth, auditing 177 clients in 2023 compared to 296 clients in 2022.

Of the firms mentioned in the tip above, only Marcum made the list of top ten audit firms (excluding SPACs, that’s a sore subject for Marcum anyway):

Given the PCAOB’s sudden enthusiasm for enforcement, and given that audit isn’t exactly a license to print money, maybe there’s something to this. Who needs the headache?

If you’ve heard about this or just want to speculate wildly, have at it in the comments or shoot me an email. I’ll do some digging in the meantime. It’s the Friday after Labor Day, there’s nothing else going on.

Small update: I spoke to someone this afternoon who digs through 8-Ks for fun (or work, whatever), they said what they’ve noticed lately would confirm this to be true. Definitely warrants further digging.

Update: On Friday night we received an email from Jeff Weiner himself: “Marcum is not getting out of the SEC audit business.”

Update #2: We’ve received what appears to be an internal email from Matt Armanino to all Armaninians announcing the firm’s decision to exit the SEC audit practice. Armanino will continue to provide services to these companies, just not audits.

Update: We were pointed to a recently filed annual report from a soon-to-be-former audit client of CliftonLarsonAllen (CLA) that confirms CLA is getting out of SEC audits. The annual report is pretty clear:

[Client’s] independent registered public accountant informed the Company that CLA would decline to stand for re-appointment after completion of the audit for the year ended December 31, 2022 as a result of CLA’s determination to cease providing certain audit services to SEC registrants upon completion of the 2022 audit cycle.

We confirmed this with a second source, CLA is 100% out.

Our first tipster also said RSM hired an outside consultant to help them figure out if they too should dip out, the consultants ultimately determined the reputational damage from doing so would be too great to justify exiting the SEC audit space. So RSM is still in unless we hear otherwise.

Apparently no one cares about CBIZ as we’ve gotten no further tips on whether they’re in or out.

The post CONFIRMED: Mid-Tier Firms Are Getting Out of the Public Company Audit Game (UPDATE) appeared first on Going Concern.

Marcum announced on Tuesday that 31 men and women are ascending to exalted partner status at the firm, 39% of whom are women.

This latest partner class would have beat 2021’s record of 29 freshly minted Marcum partners had the Friedman merger not injected several extra individuals into the class of 2022. Last year’s 37 partner promotions included professionals who joined the firm as part of Friedman’s merger into Marcum less than a week before the partner announcement.

As one would expect, there is a press release:

Marcum has announced that 31 people have been promoted to partner across the U.S. These promotions underscore Marcum’s focus on talent development, career progression, and a commitment to rewarding high performance.

“These new partners embody the essence of Marcum’s dedication to excellence, bringing together unique experience, unrivaled proficiency, and a drive to innovate,” said Jeffrey M. Weiner, Marcum’s chairman and chief executive officer. “The pace of change in our industry is swift, and these individuals have risen to the occasion, blending technical expertise with a deep understanding of our client’s needs. My sincere congratulations to them on behalf of the Executive Committee and the entire firm.”

Molly Crane, Marcum’s chief human resources officer, shared, “We’re excited to welcome our new partners, each enhancing Marcum with their experience, aptitude, and insight. They will be instrumental in leading Marcum into the future. With each promotion cycle, we hope to show Marcum’s position as the ideal springboard for professionals seeking a diverse and rewarding career journey.”

You need to wear knee-high boots just to read that.

The new Marcum partners and their service lines are:

• Rosanne Smith (Tax & Business Services) – Costa Mesa
• Jessica McCauley (Transaction Advisory Services) – New Haven
• Gary Smith (Assurance Services) – New Haven
• Marissa Turrell (Valuation, Forensics & Litigation Services) – Hartford
• Fiorella Belardi (Tax & Business Services) – Miami
• Mileny Kondorosi (Tax & Business Services) – Miami
• Shivanni Narain (Assurance Services) – Fort Lauderdale
• Derek Parks (Risk Advisory Services) – Tampa
• Jeremy Handlon (Assurance Services) – Portland
• Samuel Scherr (Tax & Business Services) – Rockville
• Joseph Mecagni (Business Enterprise Services – Tax) – Boston
• Marina Margarucci (Tax & Business Services) – East Hanover
• Robert Schumin (Tax & Business Services) – Marlton
• Blerina Demiri (Tax & Business Services) – New York
• Philip DiBartolomeo (Quality Control) – New York
• Matthew Giovine (Tax & Business Services) – New York
• Giuseppe Ienopoli (Assurance Services) – Melville
• Andrew Kantor (Business Enterprise Services – Tax) – New York
• Christopher Manzo (Tax & Business Services) – Melville
• Rashi Ray (Quality Control) – New York
• Benjamin Tenenbaum (Assurance Services) – New York
• Brian Trombley (AIG Assurance Services) – New York
• Marilea Campomizzi (Assurance Services) – Mayfield Village
• Nicholas Marazza (Tax & Business Services) – Fairlawn
• Nicholas Thomas (Tax & Business Services) – Philadelphia
• Matthew Weiler (Assurance Services) – Philadelphia
• Kyle Connors (Assurance Services) – Providence
• Jennifer Freitas (Assurance Services) – Providence
• Jeffrey Jackson (Tax & Business Services) – Nashville
• Husnain Siraj (Assurance Services) – Houston
• Karla Jimenez (Client Accounting & Advisory Services) – Washington, DC

In the same press release, Marcum says it also promoted 509 associates to new roles. Congrats to all!

The post Promotion Watch ’23: Marcum’s 31 New Partners Would Be a Record Were It Not For Last Year’s Freidmans appeared first on Going Concern.

The request, received by TIGTA on February 18, 2022 urged TIGTA to “open an inquiry into the revolving door between the country’s top accounting firms and the Federal Government and to inform Congress and the public about [TIGTA’s] findings.” The request noted that the review should include “the extent to which large accounting firms and their employees are taking advantage of the revolving door [i.e., employees moving] between their firms and Government service at the IRS.”

Said TIGTA:

We considered this request when developing the scope of our review.

The Congressional request provides information that shows that similar to the IRS, the large accounting firms also have Codes of Conduct and Ethical standards. Specifically, in their response to a Congressional inquiry, the firms noted that they review and adhere to post Government restrictions. Additionally, each of the firms have resources available to their employees, such as ethics officers and Hotlines, for individuals to contact if they have ethical questions and/or concerns.

The overall objective of this audit was to assess the IRS’s processes and procedures to identify and address potential conflicts of interest regarding tax administration matters involving large corporations. Here’s what they found:

Our analysis identified 496 employees (executives and non-executive employees from the Large Business and International Division, Office of Chief Counsel, and Independent Office of Appeals) who received income from a large accounting firm or a large corporation either prior to joining, during their time at, or after leaving the IRS. Of these 496 employees:

• 241 employees had income from a large accounting firm.
• 255 employees had income from a large corporation.

Our review found no direct correlation between the employees’ work assignments and the company or firm from which they came or left for in the private sector. However, our review identified four Office of Chief Counsel non-executive employees who charged time to a private letter ruling in which the taxpayer’s representative was the same large accounting firm that the employee recently worked for before joining the IRS or left the IRS to join. While not a direct correlation, this can raise impartiality concerns.

Deeper into the report some of the actual numbers are redacted.

Our analysis identified that 241 of the 496 employees received income from a large accounting firm either prior to joining the IRS, during their time at the IRS, or after leaving the IRS. Specifically, we identified:

• 184 current IRS employees, including [redacted] employees who held an executive position and the remaining [redacted] a non-executive position.
• 57 separated IRS employees, including [redacted] employees who were executives with the IRS and the remaining [redacted] who were non-executives. Of these 57 separated IRS employees, 20 had income from a large accounting firm prior to joining the IRS and subsequently separated from the IRS.

[redacted] and [redacted] of the executives previously mentioned received retirement income from a large accounting firm during their time at the IRS, and they disclosed this retirement income on their financial disclosures. [hella redacted] and [big black block] and [you know the deal]. Figure 1 provides a list of the current and former executive-level positions and examples of the types of non-executive positions within the IRS.

Figure 1 is also full of black blocks, though it does say 232 of the non-executives included in this analysis held positions such as Revenue Agents, General and Trial Attorneys, Tax Law Specialists, Economists, and Appeals Officers.

On the large corporation side, 255 of the 496 employees received income from a large corporation either prior to joining the IRS, during their time at the IRS, or after leaving the IRS. Specifically:

• 177 current IRS employees, including seven employees who held an executive position and the remaining 170 a non-executive position.
• 78 separated IRS employees, including 21 employees who were executives with the IRS and the remaining 57 who were non-executives. Of these 78 separated IRS employees, 13 had income from a large corporation prior to joining the IRS and subsequently separated from the IRS.

There were three employees included in the analysis with income from both a top accounting firm and large corporation.

Six of the executives previously mentioned received income during their employment with the IRS from partnerships, wages, and other compensation sources. All of these executives reported the sources of income on their annual financial disclosures.

Said TIGTA:

There is nothing inherently wrong with or prohibitions on individuals moving in and out of the private sector to public service, as the movement between sectors can contribute to the career development of personnel and improved organizational competencies.

However, this practice increases the risk for conflicts of interest. For example, the movement of employees in and out of the private sector to public service can increase the risk of conflicts of interest for incoming and outgoing employees and the possibility of undue influence by former or prospective employers that might lead to preferential treatment or create an unfair advantage for specific entities or individuals. Processes to address this risk should include restrictions to protect Governmental processes from abuse, but should not be so onerous that the Government can no longer attract the highly talented individuals it needs for positions in public service.

When TIGTA brought their observations to the IRS, management stated that to successfully conduct audits of large corporations, the IRS must rely on experienced agents with strong tax and accounting skills. Outside of the IRS, prospective employees with tax expertise generally
come from accounting firms, law firms, or in‐house tax departments of all sizes. As such, to recruit experienced tax professionals, the IRS must draw from these sources of outside tax expertise.

More IRS employees used the General Legal Services hotline — a phone or email system in place for them to seek ethics advice — regarding “Outside Employment” than any other topic from FY17 to FY21.

Cases in the GLS management system also include direct inquiries from management or former employees.

The GLS resolves cases either by oral discussion, e-mail to the employee, or in a more formal written response. However, the resolution or advice issued to the employee is not documented within the case management system of record. The GLS stated that the system does not contain a data field for it to track case resolutions or aggregate data based on the types of advice given.

TIGTA recommended, and the IRS agreed, that the GLS should develop a process and procedure to track and aggregate data based on the types of advice given in response to concerns raised. IRS management will review current reporting capabilities and case processing procedures to identify an effective means to track and aggregate the data and issue employee guidance once an improved process is in place.

Processes Are in Place to Identify and Address Potential Conflicts of Interest in Large Corporate Tax Administration, August 24, 2023 TIGTA Report Number: 2023-40-047 [PDF]

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Ranked on more than 50 metrics, these top performers produce superior financial and operational results while maintaining a solid foundation for growth, ensuring clients and staff alike a successful future.

Chosen from 600 U.S. and Canadian firms that participated in IPA’s 33rd Practice Management Survey, the 2023 IPA Best of the Best come in all sizes, ranging from $3.2 million to $1.6 billion in net revenue. In addition to the 60 Best of the Best firms with net revenue of $10 million or more, IPA has also named 10 Best of the Best firms under $10 million, as well as five high-performing Canadian firms, ranging in size from $9.5 million to $48.9 million in net revenue. As has been the case for the last three decades, Best of the Best firms take different approaches to running their businesses to thrive within a constantly shifting economic environment.

“These forward-thinking firms have faced an unprecedented labor shortage and economic uncertainty, but they keep their focus despite the headwinds,” says Charles Hylan, managing director at The Growth Partnership. “They don’t sacrifice long-term gains for short-term wins.”

Of the 60 firms that appear in the “Best over $10 million” category we’re only going to hit the first ten sorted by highest revenues for the sake of brevity. FORVIS is the real star here as the only firm on the list to top more than a billion in revenue ($1,685,539,000).

Montreal’s Demers Beaulne came in top by revenue of the Canadians at $48.9 million and Houston’s Aycock & Company narrowly missed the over ten million category at $9.4 million. You can see those categories along with the rest of the list here.

Congrats to all except the web designers who will be tasked with plopping a low-res “Best of the Best” graphic somewhere on the firm’s website.

IPA Unveils The 2023 Best of the Best Accounting Firms [INSIDE Public Accounting]

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The client, Greece-based Akazoo S.A, settled with the SEC for $38.8 million back in 2021 “for allegedly defrauding investors out of tens of millions of dollars in connection with a 2019 special purpose acquisition company (SPAC) business combination.” In that news release, the SEC described Akazoo as a purported music streaming business, using the word five more times in its complaint against [PDF].

Dated October 21, 2021 via the SEC:

According to the SEC’s complaint, Akazoo represented to investors that it was a rapidly growing music streaming company focused on emerging markets with more than 38.2 million registered users, 4.6 million paying subscribers, and over $120 million in annual revenue. In actuality, the complaint alleged that the company had no paying users and, at most, negligible revenue. Akazoo allegedly leveraged these misrepresentations to enter into a SPAC business combination in 2019, in which the company received nearly $55 million from the SPAC and other investors. According to the complaint, after the business combination, Akazoo became listed on Nasdaq and proceeded to defraud retail investors by misrepresenting, among other things, that it had earned tens of millions of dollars in revenue during 2019 and increased its paying subscriber base by 28% year-over-year. In reality, the company allegedly continued to have limited operations, no subscribers, and marginal revenue, all while depleting more than $20 million of investor funds.

Cue the public exclaiming “where were the auditors!?” Right here. From the SEC’s August 14 release on the Crowe charges:

According to the SEC’s order, Crowe U.K. issued a clean audit report of Akazoo’s 2018 financial statements. However, as the order finds, after Akazoo went public in September 2019 via merger with a special purpose acquisition company, also known as a De-SPAC transaction, it was revealed that the company’s 2018 financial statements falsely claimed $120 million in revenue when Akazoo had only negligible amounts of revenue. The order finds that Crowe U.K. claimed that it conducted its 2018 audit in accordance with Public Company Accounting Oversight Board (PCAOB) standards when, in fact, its Akazoo audit team had almost no experience or training in PCAOB standards. Further, the order finds that the audit team overlooked red flags when, for instance, they failed to exercise an appropriate level of due professional care or professional skepticism when Akazoo presented fabricated agreements and inauthentic confirmation letters to the audit team. The order also finds that Crowe U.K. made false statements in its audit report when it claimed that Akazoo fairly presented its financial statements in all material respects for 2018. The order finds that, by violating PCAOB standards in connection with the 2018 Akazoo audit, Crowe U.K., Bostock, and Stallabrass engaged in improper professional conduct.

Additionally, the SEC order finds that Bostock, as the engagement partner for the Akazoo audit, among other things, failed to appropriately supervise the engagement, maintain adequate documentation, and exercise due professional care. The SEC order also finds that Stallabrass, the engagement quality reviewer for the audit, failed to conduct a sufficient engagement quality review.

Quintessential Capital Management pointed to Akazoo’s many alleged problems back in early 2020. “Looks like an accounting scheme,” “users, subscribers, revenue and profit may be profoundly overstated,” “suspicious signs of accounting manipulation,” and “” are just a few of the accusations laid out in their investigative report [PDF].

“Crowe U.K.’s failure to properly audit Akazoo contributed to the air of legitimacy that allowed Akazoo to become a publicly traded company,” said Eric Werner, the Regional Director of the Fort Worth Regional Office. “We will continue holding gatekeepers accountable, especially those whose professional failings allow financial frauds to enter our public markets.”

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From Withum’s news release:

Students will be full-time apprentice-level team members at Withum, with an opportunity to work in all service lines and industries while earning credits for their curriculum-driven experience alongside university coursework to fulfill the remaining credits needed to reach the credits hour requirement to hold a CPA license. The students may also sit for the CPA exam during the program, affording them the opportunity to become licensed CPAs by the time they start their accounting career as full-time, entry-level Staff I team members at the Firm.

Five Seton Hall students will start at the firm in September and the pilot program lasts for a year. The news release includes a quote from one of them who said:

“Everyone knows how hard it is to obtain the CPA certification, and with this program, I am substantially closer to obtaining the certification. With the help of Seton Hall University and Withum, I can now continue my academic career with the people who helped me get here.”

They don’t say how much these five folks will be paid, only that they will “receive compensation during their final year of school.”

“We truly value Withum’s partnership and investment in this innovative apprenticeship model and the Seton Hall accounting talent pipeline,” said Mary Kate Naatus, Ph.D., Assistant Provost and Dean of Continuing Education and Professional Studies at Seton Hall University. “The combination of a strong curriculum with excellent faculty members with the real world ‘work for credit’ experience on-site at Withum is an exemplary model that mutually benefits the students, industry partner and the broader accounting field.”

Wow they’re really laying it on thick aren’t they.

“The war on talent remains at an all-time high in the accounting industry, the CPA Pathway Apprenticeship is a solution to expose emerging talent to the day-to-day life of an accounting professional at Withum,” reads the release. A similar collaboration between PwC and New Jersey’s St. Peter’s University was launched last year.

If you’re going to be forced to work in order to meet some arbitrary requirement that is proven not to have any positive impact on the quality of CPAs entering the profession, there are worse places than Withum to do it.

Seton Hall University and Withum Launch CPA Pathway Apprenticeship for Aspiring Accounting Students [Withum]

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The lucky winners are (folks with asterisks are affiliated entity members not included in the partner number):

Chris Abi-Raji, tax, Southfield
Mark Barrott, strategy & operations, Southfield
William Bean, Plante Moran Financial Advisors, Auburn Hills
Andy Brahm, tax, Denver Tech Center
Amy Ciminello, tax, Columbus
Phil Clark, Plante Moran Financial Advisors, Southfield
Jason Collier, assurance, Cleveland
David DeCew, state & local tax, Detroit
Phil Flowers, tax, Detroit
Makoto Fujimoto, assurance, Detroit
Alexandria Gaynier, assurance, Ann Arbor
Chris Geck, assurance, Macomb
Steve Gibson*, Plante Moran Insurance Agency, Chicago
Brian Greko, assurance, Grand Rapids
Ali Hijazi, assurance, Macomb
Greg Hornung, tax, Denver Tech Center
Sandor Jacobson, strategy & operations, Chicago
Bryan Johnson, assurance, Columbus
Jennifer Kalina, assurance, Chicago
Dan Kapala, forensic & valuation services, Southfield
Derek Kaulfuss, transaction advisory services, Southfield
Hiro Kishinaka, tax, Columbus
Donny Lucaj, tax solutions group, Southfield
Brendan MacKinnon, assurance, Chicago
Nick Maeder, assurance, Traverse City
Tori Manix*, Real Estate Investment Advisors, Southfield
Alejandro Rodriguez, global services, Monterrey
Lisa Roelofs, international tax, Auburn Hills
Brad Rummel, risk & accounting advisory services, Southfield
Dawn Sayn, community tax practice, Ann Arbor
Mark Scovera, risk & accounting advisory services, Southfield
Kari Shea, assurance, Southfield
Ken Stevens, risk & accounting advisory services, Chicago
Jon Strycharz, state & local tax, Southfield
Jamie Timoteo*, Plante Moran Living Forward, Chicago
Sharon Ulep, healthcare consulting, Southfield
Corey VanDyke, assurance, Kalamazoo
Joe Vloedman, assurance, Grand Rapids

Earlier this year Plante Moran celebrated an impressive 25 years straight on Fortune magazine’s “100 Best Companies to Work For” at which time Managing Partner Jim Proppe said: “We have a few mottos here at the firm, including ‘The whole person comes to work,’ ‘There’s no right way to do the wrong thing,’ and ‘We care.’ These mottos aren’t just phrases, they drive the work we do, our commitment to client service, the relationships we build and the communities we foster.” Normally we call BS on statements like these but in Plante’s case we really do rarely hear complaints from staff and Jim is cool.

Anyway, congrats to all. YOU MADE IT!

The post Promotion Watch ’23: Plante Moran Outdoes Itself With Partner Promotions Again appeared first on Going Concern.

Let’s ignore that and focus on something good for RSM: fiscal 2023 revenue. The firm ended the year at $3.7 billion according to its recently released impact report, a whole 400 million dollar  — or a numerically satisfying 12.1212% — increase from RSM’s 2022 revenue of $3.3 billion.

Revenue by service line:

• Assurance 28%
• Tax 33%
• Consulting 38%
• Other 1%

Some more numbers for you:

Said Managing Partner and CEO Brian Becker in his very first impact report letter since taking over the helm after Joe Adams left last year:

Here at RSM, we provide both leading insights and compelling solutions to help our clients and our teams rise to meet these challenges. A few examples from this year include our work around economic headwinds and our support of clients during the banking crisis. We have also continued to advance our managed services offerings to help clients who are challenged with the labor shortage, are looking to operate more efficiently or are refocusing on the core of their business. And we continue to advance service offerings in new areas, such as environmental, social and governance (ESG), where our clients are looking for our support.

Simultaneously, we have been positioning our firm to meet the future. In January 2023, we launched a new global strategy for 2030, uniting all 57,000 people at RSM around the world. Domestically, we realigned our business to enable even more compelling experiences for our talent and our clients. Our lines of business are configured around common service lines, capabilities and solution sets to enable our people to build expertise aligned with their passion, assemble strong teams of experts to serve clients, and deploy digital tools and resources more quickly. Our industry teams are focused on going to market with the most compelling insights and services, and our markets are structured to harness the full power of RSM to meet the needs of our clients. We have also scaled our offices in India and El Salvador to bring on outstanding new talent to work with our domestic teams in the delivery of services to our clients.

We are deploying digital solutions more rapidly than ever as we evolve to become a digital firm providing assurance, tax and consulting services. This creates value for our clients through seamless digital engagement that complements the services our people deliver, and it creates value for our people by making their jobs more efficient—enabling them to focus on more strategic work and providing opportunities to learn new skills. Being digital is a journey, and we are well on our way.

Finally, we remain steadfast in sustaining our unrivaled, inclusive culture that compels talent to join us and grow their careers with us. We were named to the Fortune Best Companies to Work For list for the third year in a row, and once again recognized as one of People’s Companies that Care. Additionally, we doubled down on our ESG commitment by joining the United Nations Global Compact, continuing to enhance our environmental sustainability activities, signing the UN Women’s Empowerment Principles, and advancing our culture, diversity and inclusion strategy.

While you’re here, r/accounting’s RSM compensation thread is worth a look. It’s been our observation that RSM is an employee favorite, backed up by Glassdoor reviews and the firm’s listing on Great Place to Work. The money may not be the best but we hear the people are alright. Feel free to say otherwise in the comments.

RSM US Fiscal Year 2023 Impact Report [RSM]

The post RSM US Is That Much Closer to $4 Billion in Revenue appeared first on Going Concern.

First, some key information you should know:

Now in its 33rd year, the IPA 100 ranking includes the Big 4, Deloitte, PwC, Ernst & Young and KPMG, which collectively generated more than $84 billion in U.S. revenue, and 96 national, regional and local firms. These range from Chicago-based RSM US ($3.7 billion) at No. 5, and Wayne, Pa.-based Global Tax Management ($48.8 million) at No. 100. The non-Big 4 firms make up a total of $34.5 billion in net revenue and 129,110 staff.

Oh, and this:

“The labor shortage is a major driver behind the behavior of the IPA 100 firms,” says Charles Hylan, managing director at The Growth Partnership, IPA’s parent company. “The combination of too few professionals and high demand is pushing firm leaders to merge up, outsource tax work and hire non-CPAs, among other strategies. They seem to be working so far, as firms are growing fast and producing impressive financial results. The question now is whether year-over-year growth of 18% will continue next year.”

Ready for your top ten? EY might have been able to pull a upset to oust PwC from second place had they not been distracted with the dumpster fire that was Project Everest. Oh well, better luck next year.

Let’s compare to 2022, 2021 numbers are in parentheses:

1. Deloitte (1)
2. PwC (2)
3. EY (3)
4. KPMG (4)
5. RSM (5)
6. BDO (6)
7. Grant Thornton (7)
8. FORVIS (14 and 17*)
9. CLA (8)
10. Baker Tilly (9)

*BKD and DHG were in the 14th and 17th spots respectively in 2021, the FORVIS merger bumped them up together to #8 in 2022.

It isn’t until you get to #16 on this year’s list — CohnReznick — that you find a firm with less than one billion in revenue. If anyone has the 2013 IPA list available let us know, all our laptops from that era have been responsibly recycled so if we did save it it’s gone now and the link a PDF of it used to live at is dead as is the AccountingWEB URL we linked to in a quick story about it because all of AccountingWEB is dead. We’re curious to know just how much revenues have grown for the top firms on the list in the last decade, mostly so we can compare that growth to salary growth over the same period. You know why.

Anyway, full list here. IPA sells extended stats and data for $495 if you’re interested otherwise just check the table for your firm or wait for the inevitable press release they’ll put out to brag about being on this distinguished list to find out where your overlords rank.

The post The Big D Once Again Tops the INSIDE Public Accounting Top 500 List appeared first on Going Concern.

Australian Financial Review:

Deloitte is on target to become the largest of the big four consulting firms this financial year thanks to the collapse in revenue at its once-dominant rival PwC.

The firm’s annual income jumped more than 14 per cent to $2.85 billion in the year to May. [Ed. note: Deloitte Australia numbers only, obvs]

While PwC is still the larger firm, the devastating tax leaks scandal of the last financial year means it will be a much reduced outfit in 2023-24.

Deloitte’s strong result, driven mainly by its powerhouse consulting arm, comes as sector leaders adjust to a political environment poisoned by PwC’s tax scandal.

Deloitte reported global revenue of $59.3 billion for its last fiscal year ended May 2022, fiscal 2023 numbers for the global body should be out in September. Like all firms around the world, Deloitte saw a drop-off in consulting toward the end of last year (Gregorian, not fiscal) so picking up PwC’s contracts and clients would be a huge help to the bottom line.

Of that $2.85 billion ($1.9 billion USD) in revenue, consulting accounted for 21 percent. That’s nearly twice as much as the next highest category, Financial Advisory.

Recent events in our profession have clearly demonstrated the value of our longstanding commitment at Deloitte to maintaining strong standards of governance, ethics and integrity in all that we do. This is what our people, our clients and our stakeholders expect and demand.

[snip]

While we always strive to do the right thing, we know that no person or organisation is perfect – there is always room for improvement. We need to have the humility to listen, to learn from others, to consult when we are uncertain, and to never put self-interest ahead of what is the right thing to do. And when issues do occur, we will take open and honest accountability for what has happened. So, as we look ahead to FY24, we reinforce our commitment to serving our clients with distinction and providing our people with a world class talent experience, while continuing to recognise that trust is at the heart of our brand and is fundamental to how we should act and carry ourselves every day with our clients, our people and each other.

PwC Australia revenue numbers are expected in a few weeks, last year they saw total revenue of $3.0 billion and growth of 17%. Deloitte was already stealing the consulting crown before PwC’s scandalous behavior came to the surface this year, any real effect from clients severing their relationship with PwC due to the tax scandal and the selling off of PwC’s public sector consulting arm for a measly dollar won’t really show until next year’s figures.

The post Deloitte is Taking the PwC Tax Scandal Straight to the Bank appeared first on Going Concern.

The 259th Largest Accounting Firm Is Paying For Unlicensed Staff to Pursue a Master’s at the 87th Best Online Business School

More than 90 Clayton & McKervey shareholders and associates will join Wipfli (revenue of $506.7 million), bringing the headcount to about 3,300. Clayton & McKervey also brings with it more than 2,000 clients. Shout-out to whoever wrote this press release for not using “leading firm” in the press release, that phrase has lost all value due to following firms constantly abusing it in their own press releases.

Speaking of press releases, here’s some of it:

Clayton & McKervey is a full-service public accounting firm, providing tax, audit, digital advisory and business consulting to domestic and foreign clients.

The Clayton & McKervey team will bring to Wipfli its proven experience in the automotive and technology sector; specifically in the manufacturing and distribution, industrial automation and architecture and engineering industries, among others. Clayton & McKervey has a special focus helping closely held domestic and international companies compete in the global marketplace. Our combined businesses will allow us to bring additional value to the clients we serve.

Clayton & McKervey is well known for helping foreign-owned companies expand to the U.S. and helps domestic entities expand abroad. Their reach is significant: including North America, Europe, South America, Asia, Australia and the United Kingdom.

Wipfli offers Clayton & McKervey clients full-service tax and financial solutions as well as the benefits of expanded services that help businesses improve organizational performance, coach their executives and teams, transform their digital capabilities, optimize finances and drive decisions with data and analytics.

Then comes the usual “client service” nonsense, blah blah, quotes quotes. “We are looking forward to Clayton & McKervey joining our firm,” said Kurt Gresens, Wipfli’s managing partner. “Their strong reputation and business approach in accounting, audit, tax and consulting will be a great fit at Wipfli. Their deep bench in helping startups and multinational companies based in the U.S. and abroad will help us connect with a broader client base, enabling us to introduce a larger range of consulting services including digital, cybersecurity, cloud computing and outsourced accounting services. Working together, we’ll be well-positioned to support them.” Presumably when he says “deep bench” he means plenty of talent and not an excess of talent sitting around twiddling their thumbs.

The merger was of course advised by Allan D. Koltin, CEO of Koltin Consulting Group, the Patti Stanger of the accounting profession (minus the problematic comments). “Clayton & McKervey was sought after by numerous suiters but selected Wipfli for the culture connections and strategic fit with middle-market and high-net-worth clients,” he said. “They also saw huge growth opportunities for their younger talent and leaders.”

With combined revenues of 522.7 million between the two firms, Wipfli might just unseat #19 Eide Bailly next year. Funny enough, Wipfli and Eide Bailly almost merged a decade ago, ultimately a disagreement on “key terms” sabotaged that deal.

The Wipfli/Clayton & McKervey transaction takes effect on September 1. And now that makes two times in 14 years we’ve written about Clayton & McKervey. Moving up in the world!

The post The 259th Largest Accounting Firm Just Skipped the Line to Number 20 With Wipfli Merger appeared first on Going Concern.

The diligent paper-pushers at the PCAOB (the “P” stands for both paper and pushing) have sanctioned CohnReznick for failing to report key information on PCAOB Form 3 within the required timeframe. PCAOB Rule 2203, Special Reports requires any registered public accounting firm to file a special report on Form 3 to report information to the Board no later than thirty days after the occurrence of the event. In this case, the event was actually four reportable events regarding two disciplinary proceedings brought by the SEC against the firm and partners Stephen M. Wyss (engagement partner), Stephen H. Jackson (engagement quality review partner), and Robert G. Hilbert (Managing Partner of Assurance and National Director of Accounting). You can read about that here.

TL;DR the firm was sanctioned for deficiencies in its system of quality controls that led to audit failures in connection with a quarterly review and year-end audit of one client and a year-end audit of another client, resulting in a $1.9 million penalty for the firm. In one case, Wyss, Jackson, and Hilbert were confronted with indications that the client’s goodwill impairment test was not supported by sufficient evidence, but they still accepted the company’s conclusion that goodwill was not impaired even though appropriate additional audit procedures had not been performed. Separately but related, the two clients were charged by the SEC for filing fraudulent financial statements prior to their bankruptcies.

The SEC order was issued on June 8, 2022, CohnReznick did not file a Form 3 until December 12, 2022.

Tuesday’s press release makes it crystal clear that the PCAOB is sick of this shit. “As part of the Board’s efforts to strengthen enforcement, it has increased its vigilance concerning firms’ failures to disclose required events on Form 3, or to do so by the applicable deadline,” it reads.

“Registered firms must report qualifying events on Form 3 on a timely basis so that such information is available to investors and can be used as part of the Board’s oversight of those firms,” said Robert E. Rice, PCAOB Director of Enforcement and Investigations.

CohnReznick, without admitting or denying the findings, settled with the PCAOB and consented to a disciplinary order that censures the firm and imposes a $20,000 civil money penalty. The order also requires the firm to comply with its PCAOB reporting policies and procedures, including those pertaining to providing reasonable assurance that reportable events are reported on the applicable PCAOB form in a timely and complete manner.

The penalties will continue until compliance improves!

The post CohnReznick Gets Fined For Not Reporting an Earlier Fine to the PCAOB in a Timely Fashion appeared first on Going Concern.

Concerns over the reputation and legal troubles surrounding the audit firm Marcum LLP have led members of the Chariho School Committee to terminate its contract, moving in a different direction for the first time in 18 years.

Members of the School Committee voted 11-0 on Tuesday, with Donna Chambers abstaining, to terminate the contract with James Wilkinson of Marcum LLP. The committee then voted unanimously to award the bid to the next qualified firm, Hague, Sahady & Co., PC.

“It comes down to a reputation issue; the issues that were pointed out in such a high percent of audits coming from the firm,” said member Tyler Champlin, who had requested the agenda item alongside Chairwoman Catherine Giusti and motioned for the dismissal of Marcum LLP.

“You aren’t going to go to a doctor with a 25-50% mortality rate, at least most people wouldn’t,” he said. “Knowing that this company has had an issue with a member town (Charlestown) as well, I’m not comfortable with it at this point.”

We wrote about the issue with a member town previously. Marcum sent tiny little Charlestown, Rhode Island an unitemized $55,992 bill for out of scope services on the town’s 2022 audit, the town council was furious, Marcum kept dodging them when they asked for an explanation of fees, and eventually the town threw them $18,000 to settle the matter. Obviously they’re no longer a client.

This of course pales in comparison to the bigger issue of the PCAOB and SEC hitting Marcum with huge fines in June for taking on too many clients and failing to perform the work with the required level of professional competence. No really, the PCAOB’s press release about it uses the word “competence” four times.

• Marcum’s quality control system did not provide reasonable assurance that it could execute these audits with competence.
• “Firms have a responsibility to undertake only those engagements that they can reasonably expect to be completed with professional competence,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations.
• The PCAOB found that Marcum LLP’s system of quality control failed to provide reasonable assurance that the firm would:
  • Undertake only those issuer engagements that the firm could reasonably expect to be completed with professional competence and appropriately consider the risks associated with providing professional services in the particular circumstances;
  • Ensure that partner workloads were manageable to allow sufficient time for engagement partners and engagement quality review partners to discharge their responsibilities with professional competence and due care;

Sucks for them but it sure is funny for us!

The post Client That Fired Marcum Over Audit Quality Compares the Firm to a Doctor Killing Half His Patients appeared first on Going Concern.

Let’s throw a theoretical out here. Imagine you are a highly qualified Canadian CPA with exemplary communication and data analytics skills and you have received two identical offers from leading firms. Would a clean, streamlined aesthetic and open plan sightlines, accentuated by generous glazing and abundant natural and contemporary LED lighting compel you to choose the firm whose office checks all those boxes? Baker Tilly seems to think so.

The firm has a tendency to credit irrelevant factors in its recruiting strategies. Case in point: Baker Tilly ‘Murica using paid endorsements from athletes and adventurers to appeal to thrill-seeking young people, those people naturally being attracted to the accounting profession of course. “Baker Tilly’s purpose is to unleash and amplify talent – to help our people discover their strengths, sharpen their skills, deepen their knowledge, explore possibilities and soar to personal heights,” said former Baker Tilly CEO Alan Whitman when the celebrity endorsements were trotted out last March. “Jimmy Chin knows all about soaring to personal new heights.”

Ah yes, accountants relate deeply to this.

In the vein of things that have little relevance to talent, Baker Tilly Canada is now flexing fresh new Vancouver office space in a probably paid article in BCBusiness and somehow relating this to talent:

A beautiful, future-ready renovation at Baker Tilly’s Vancouver office demonstrates the firm’s commitment to attracting the best in the business.

Global accounting firm Baker Tilly’s office on Burrard Street in Vancouver is expanding to accommodate a growing need for top talent. The accounting firm’s team of over 200, which occupies the ninth floor of Commerce Place, will now enjoy newly renovated space that Marketing Manager David Keene calls the “office space of the future”.

“This space is a continuation of Baker Tilly’s philosophy, which means it supports a hybrid working environment, the company’s open-door policy and an attractive proposition for today’s top talent,” Keene says. “Baker Tilly wanted a warm, inviting space where people can enjoy their workspace and feel open and welcome connecting with others,” Keene says. “At the same time, it provides key areas that foster deep concentration and focus.”

As you no doubt read the above paragraphs with your mouth agape, take a breath and prepare yourself because there’s more.

The modern space features screened cubicle workspaces and executive offices. The offices are walled in glazing with sliding glass doors for an approachable aesthetic. Conference space and meeting rooms will act as collaborative spaces and a 200-person theatre space will facilitate large meetings, training and presentations.

There’s also a “social hub” with a games area so you can grief your colleagues and teabag your manager in a quick game of Valorant. Oh, probably not those kinds of games. These “key amenity areas are focused on employee comfort and experience,” the article says.

Here it comes:

The renovation is an important step in recruitment and retention as it creates a progressive, supportive space to attract the best in talent. “This space is designed as a no-barrier space that promotes collaboration and inclusivity,” Keene says. “It was important for Baker Tilly to create a space that supports positive mental health and an uplifting environment, especially through the darker winter months.”

Post-Covid office redesigns and moves are the ping-pong tables of the 2020s. Just say you redid the office and let’s move on.

The post Baker Tilly Canada Deludes Itself Into Thinking Fresh Office Space Will Be a Big Recruiting Advantage appeared first on Going Concern.

TL;DR Marcum violated PCAOB rules related to the firm taking on “a substantial number” of audit clients, more work than they could handle which led to serious quality control deficiencies. They got fined big and now the PCAOB is requiring significant changes at the firm.

The news release — that uses the word competence four times — has the gory details:

Several of Marcum LLP’s violations of PCAOB rules and quality control standards were the result of the firm accepting a substantial number of audit clients, including hundreds of special purpose acquisition company (SPAC) audits, resulting in a dramatic increase in its issuer audit practice between January 2020 through October 2021. Marcum’s quality control system did not provide reasonable assurance that it could execute these audits with competence.

“If firms put profits ahead of PCAOB standards that protect investors, there will be consequences,” said PCAOB Chair Erica Y. Williams. “Today’s order makes clear, the PCAOB will use every tool at our disposal, including requiring a firm to change its supervisory structure, in order to ensure compliance with PCAOB standards.”

The Division of Enforcement and Investigations closely coordinated its investigation of Marcum LLP with the SEC Division of Enforcement.

“Firms have a responsibility to undertake only those engagements that they can reasonably expect to be completed with professional competence,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations. “When they fail to do so, and fall short of PCAOB standards, they will be held accountable. We at the PCAOB thank the SEC for its significant assistance in this matter, which reflects the strong working relationship between the PCAOB and SEC enforcement staff.”

The PCAOB found that Marcum LLP’s system of quality control failed to provide reasonable assurance that the firm would:

• Undertake only those issuer engagements that the firm could reasonably expect to be completed with professional competence and appropriately consider the risks associated with providing professional services in the particular circumstances;
• Ensure that partner workloads were manageable to allow sufficient time for engagement partners and engagement quality review partners to discharge their responsibilities with professional competence and due care;
• Timely assemble complete and final sets of audit documentation;
• Timely and accurately file Form APs;
• Perform procedures to identify and assess the risks of material misstatement at the assertion level with respect to SPAC audits;
• Ensure that engagement teams were consulting with individuals within or outside the Firm, when appropriate, when dealing with complex issues;
• Perform sufficient procedures to determine whether certain matters were critical audit matters; and
• Make all required communications to issuer audit committees.

Marcum did not admit or deny the findings, the firm settled with the PCAOB and consented to a disciplinary order. In addition to the civil money penalty on the firm and a censure, the order requires the firm to engage an independent consultant to review and make recommendations concerning its quality control policies and procedures, after which the firm is required to implement said recommendations. This is the first time a PCAOB settled disciplinary order has ever required functional changes to the quality control supervisory structure of a registered firm.

Beyond requiring certain training for all audit staff, the order, among other things, requires Marcum LLP to make functional changes to its supervisory structure related to the firm’s system of quality control. These changes – requiring the firm to create a new role and hire an individual to serve as head of the firm’s quality control system (“Chief Quality Officer”) and to create a committee responsible for the oversight function for the audit practice (“Audit Oversight Committee”) – were important and necessary measures to address the significant quality control violations identified in the PCAOB’s investigation.

The related SEC order: SEC Charges Audit Firm Marcum LLP for Widespread Quality Control Deficiencies and PDF of the SEC order.

PCAOB settled disciplinary order against Marcum LLP by Adrienne Gonzalez on Scribd

The post Marcum Took On Too Many Clients and Totally Wrecked Their Quality Control, Says the PCAOB in Disciplinary Order appeared first on Going Concern.

Because the accounting profession has a long history of being reactive rather than proactive especially as it pertains to emerging technology, firms are now scrambling to develop AI best practices and acceptable use policies. In the early days of ChatGPT (by “early days” I mean like four months ago), firms told staff to be cautious with ChatGPT and not to throw client data at it; at the same time, firms were developing their own AI technologies. Said a PwC Australia spokeswoman in February, “Our policies don’t allow our people to use ChatGPT for client usage pending quality standards that we apply to all technology innovation to ensure safeguards. We’re exploring more scalable options for accessing this service and working through the cybersecurity and legal considerations before we use it for business purposes.” Not long after, PwC US announced a $1 billion investment in AI to expand and scale its artificial intelligence offerings. There is absolutely no doubt firms are eager to figure out how to monetize this technology and fast.

While they’re doing that, there’s the issue of staff use of these tools. We really don’t know where stuff ends up when it’s put into the AI void but we do know ChatGPT uses your conversations to improve it. That’s fine if you’re a writer for a shitty accounting news site and need headline ideas because you ate a weed gummy for lunch knowing damn well you had a deadline, not so much if you are a professional handling sensitive data. OpenAI started offering an opt-out option for ChatGPT chat history however even if you choose this open they say “we will retain new conversations for 30 days and review them only when needed to monitor for abuse, before permanently deleting.” Boy is it gonna be fun when the data breaches start making headlines.

For now, we get a look at how one firm is handling the issue. Ranked #68 on the Accounting Today Top 100 and the sixth fastest-growing firm in the country, Sax LLP is working on an AI policy for its staff and spoke about it to ROI-NJ:

Leon Grassi happened to be drafting the in-house rulebook for how Sax LLP accountants might use artificial intelligence platforms minutes before speaking to ROI-NJ on the exact same topic.

It’s less coincidence than predictable that he was occupied by the thing a lot of accounting firms are right now.

“To be honest, an AI acceptable use policy for staff is not something we ever thought we’d be creating at an accounting firm,” he said. “But we’re by no means the progenitor of this. It’s spreading around like wildfire now.”

Grassi, chief marketing officer and head of business development at Parsippany-based Sax LLP, said that, with the emergence of AI-driven language processing tools such as ChatGPT, accounting firms aren’t just thinking about how their staff might interact with these tools far down the line. … It’s already happening.

In other words, as Grassi said, the cat’s out of the bag. The technologies are readily accessible to anyone. And accounting firm leaders don’t see themselves as in a position to tell their staff that they shouldn’t be used for research, emails, articles or other tasks.

Last week I wrote about several people who feel more than comfortable dictating what people can and can’t use AI for, 40% of HR professionals surveyed by talent company iCIMS for their annual “Class of” report who said that using ChatGPT/AI bots during the hiring process is a definite deal breaker. Screw those guys.

If your firm has issued an AI acceptable use policy we want to see it. Email editor@goingconcern.com, please and thank you.

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Masking requirements during the pandemic presented an extra set of challenges for Megan Howe, who was diagnosed as profoundly deaf at age 2. Lip reading is one of the ways she communicates with others.

Her employer, the certified public accounting firm of Hungerford Nichols, stepped up and provided clear face masks to her co-workers to improve accessibility in the workplace.

The firm had previously arranged for closed captioning of meetings so Howe — and others with auditory disabilities — could follow conversations and participate in discussions in real time.

Howe says she endeavors to be her own best advocate. She doesn’t hesitate to remind people to face her when speaking, or that she’ll need closed captioning for meetings involving multiple people.

“Everybody here wanted to make sure Megan had everything she needed to be successful,” says Heather Halligan, marketing manager at Hungerford Nichols, which has a goal of increasing diversity, equity and inclusion among its workforce. “Too often, disabilities like Megan’s — which are not obvious — are the last to be considered in DEI initiatives. Gender, race, and disabilities that require a wheelchair are more apparent. Hiring qualified staff with hidden disabilities may require intentionality.”

Megan, 33, has worked for the 140-person West Michigan firm for four years. She appeared in the book “Deaf and Hard of Hearing Certified Public Accountants, Second Volume” which tells the stories of eight deaf and hard of hearing certified public accountants and is now on my reading list because that sounds interesting. “She is vivacious, charismatic, and gregarious,” reads the profile in The Lakeshore. “She’d be high on the guest list of someone throwing a party.”

When she received her bachelor’s in accounting, her hearing dog Blarney received his own honorary degree.

Accountant with hearing loss advocates for her success [The Lakeshore]

The post Here’s a Feel-Good Story About an Accounting Firm Going the Extra Mile for Its People appeared first on Going Concern.

“Our incoming partners inspire our team members with their passion for our profession and deep commitment to our mission,” said Baker Tilly CEO Jeffrey Ferro. “With their leadership, I look forward to our continued journey creating the advisory CPA firm of the future, today.”

In alphabetical order, Baker Tilly’s newest partners are:

• Marsha S. Ackerman, CPA Assurance – Real Estate and Construction (Washington, D.C.)
• Nirav H. Badani, CPA Assurance – Financial Services (Irvine, California)
• Ashley R. Barber, CPA Tax – Commercial (Iselin, New Jersey)
• Jason M. Carter, JD Tax – Manufacturing and Distribution (Chicago, Illinois)
• Lindsay N. Coffey, CPA Consulting – Client Accounting Services (Dallas, Texas)
• Kevin Coonan, MBA Consulting – Healthcare Solutions (Chicago, Illinois)
• Matthew J. Damone, JD Tax – Transfer Pricing (Philadelphia, Pennsylvania)
• Bishesh Devkota, Consulting – Baker Tilly Digital (Washington, D.C.)
• Jonathan K. Drysdale, CPA Tax – Private Client Services (Dallas, Texas)
• Heather M. Dwyer, CPA Tax – Private Wealth (Philadelphia, Pennsylvania)
• Victor Geagla, CPA Assurance – Commercial (Washington, D.C.)
• Laura K. Groppoli, CPA Assurance (Minneapolis, Minnesota)
• Sheanne M. Hediger, CPA Assurance – Public Sector (Eau Clare, Wisconsin)
• Caroline H. Hipple, CPA Assurance – Higher Education and Not-for-Profit (Iselin, New Jersey)
• Kirk J. Jirak, CPA Tax – Commercial (Tampa, Florida)
• Christopher M. Kassay, CPA Assurance – Real Estate and Construction (Philadelphia, Pennsylvania)
• Trenton J. Kleist, CPA Assurance – Real Estate and Construction (Madison, Wisconsin)
• Andrew J. Koelbl, Consulting – Real Estate Advisory (Madison, Wisconsin)
• Katie E. Kral, MSA Consulting – Client Accounting Services (Chicago, Illinois)
• Meghan C. Loomis, PHR Consulting – Baker Tilly Digital (Chicago, Illinois)
• Michael T. Maguire, JD, CPA Tax (Tampa, Florida)
• Shabinaaz F. Mahdi, CPA Tax – Professional Services (Washington, D.C.)
• Carla M. Mattsson, CPA Tax – Commercial (Boston, Massachusetts)
• Andy P. McCarty, CPA Tax – Baker Tilly Advantage (Appleton, Wisconsin)
• Andrew J. McCauley, CPA, CISA Consulting – Risk Advisory (Dallas, Texas)
• Randal S. Nachenberg, CPA Tax (Encino, California)
• Joseph C. Pellerite, CPA Consulting – Client Accounting Services (Philadelphia, Pennsylvania)
• Brad J. Polizzano, JD, LLM Tax – Commercial (Manhattan, New York)
• Claire E. Pugh, CPA, MBA Assurance – Real Estate and Construction (Dallas, Texas)
• Sara A. Rebman, CPA, MSA Tax (Detroit, Michigan)
• Raluca G. Romonti, CPA Tax – Commercial (Tampa, Florida)
• Bill Ruscitti, CPA, MAS Assurance – Real Estate and Construction (Chicago, Illinois)
• Michael A. Schmittlein Jr., CPA Tax – Real Estate and Construction (Washington, D.C.)
• Sherry Sedighi, CPA Assurance (Los Angeles, California)
• Deana L. Serracino, CPA Tax – (Dallas, Texas)
• Russell J. Sommers, CPA, CISA Consulting – Risk Advisory (Iselin, New Jersey)
• Michael W. Sullivan, CPA, MBA Consulting – Client Accounting Services (Boston, Massachusetts)
• Richard J. Thompson, CPA Assurance – Commercial (Washington, D.C.)
• Jack K. Torpey, FCA Consulting – Forensics, Litigation and Valuation Services (London, United Kingdom)
• Nuwandi G. Trahan, CPA Consulting – Real Estate Advisory (Austin, Texas)
• Michael W. Wascura, CPA Assurance – Higher Education and Not-for-Profit (Lehigh Valley, Pennsylvania)
• Brooke M. Weitzer, CPA Tax – Commercial (Madison, Wisconsin)
• Kevin M. Welch, CPA Assurance – Manufacturing and Distribution (Detroit, Michigan)
• Jason C. Winterburn, CPA Consulting – Transactions and Financial Advisory (Washington, D.C.)

If you’re playing along at home, that’s 35 CPAs, or a hair under 80% of the total incoming partner class. Tax saw the most partners at 16, followed by 15 in Assurance and 13 in Consulting.

Congratulations to all, you made it!

The post Promotion Watch ’23: The Baker Tilly Partner Bench Is Now 44 People Deeper appeared first on Going Concern.

Armanino is getting into the marketing business. In recent years, there’s been a push for CPA firms to serve as one-stop shops for more than just tax expertise and audits. And why not? Deloitte Digital has been doing it (and exceptionally well as evidenced by their many, many awards) for years.

The firm announced yesterday that it launched a Strategic Marketing Outsourcing service as part of the firm’s portfolio of business outsourcing offerings. The SMO service will be led by Keith McNichols, who describes himself on LinkedIn as a “visionary, strategic thinker, and transformational leader with 20+ years of expertise in Marketing, Customer Experience, Account Management and Business Development. Broad Marketing/Tech/SaaS/PaaS experience from high-level strategy to hands-on activity.” He’s done agency work and spent 16 years at Disney as a director of corporate alliances. He also teaches part-time at Azuza Pacific University. He joined Armanino last year.

The new full-service marketing offering provides a turnkey “Office of the CMO” solution backed by Armanino’s top-tier digital marketing and strategy and transformation consulting capabilities, reads the press release.

“In today’s shifting marketplace, it’s more important than ever to have a strong strategic marketing plan that results in measured success for each aspect that clients invest in,” says McNichols. “To find success in-house requires a significant investment of time and money. As a leader in providing growth-focused outsourcing services, Armanino now offers its Strategic Marketing Outsourcing service to bring firms the same resources and capabilities that a full-fledged marketing team would, from growth-focused plans to customer-focused creative services, backed by the power and entrepreneurial spirit of Armanino.”

Armanino — or rather whoever writes their press releases — says a key driver for this service line is the growing demand from businesses seeking outsourcing support for all facets beyond their core operational focus.

“Armanino offers a refined approach to delivering comprehensive outsourcing solutions and a growing demand from our clients to support the marketing arm of their business,” says Ryan Prindiville, who leads Armanino’s Consulting practice. “Through our partnerships and in-house capabilities, we have the ability to support every need of a CMO from specific marketing technology implementation to high-level brand marketing strategy. We look forward to delivering the best support possible to help our clients grow.”

The buzzword sludge gets a little thick toward the end of the news release, grab your boots.

Using a deliberate and customizable three-phased approach, Armanino’s SMO team will provide a full-fledged strategic vision and assessment of a client’s growth initiatives and plans, develop the internal messaging and activation plan, and then execute it with specific feedback and optimization. Armanino will apply its ROI mindset to focus on enabling growth for clients through its marketing efforts over the short and long term.

Armanino already owns and operates AMF Media Group, an agency offering SEO and SEM services, social media marketing, video, digital ads, mobile support, CRM, email marketing, branding, copywriting, event support and more. The firm says the new SMO initiative whill give clients acess to “the full range of customizable offerings led by a deep bench of marketing executives working alongside McNichols.

The post Armanino Adds Marketing to the List of Services on Offer appeared first on Going Concern.

Reports The Sun, council members received the out of scope services bills dated January 18 and February 15, on top of the agreed upon $69,500 for 450 hours worked in the original contract with Marcum. The contract included a breakdown of billable hours from partners down to staff, whereas the surprise out of scope bills had none. The contract stated that fees “will be rendered as the work progresses, and are due and payable upon presentation.” The bill dated February 15 arrived after the town’s audit was submitted to the state, said Council President Deborah Carney.

Marcum was slow to respond to inquiries about the additional fees, say officials, and the firm reportedly told the town they’d have to wait until busy season ends to work out the billing issue.

Charlestown Town Solicitor Peter Ruggiero tried to negotiate a reduced fee, and on March 15 acting Town Administrator Jeffrey Allen and Treasurer Irina Gorman had a Zoom meeting with Marcum partners. At that meeting, Marcum promised to send over an itemized bill within a couple days. It seems that didn’t arrive.

They could have gone to court to resolve the issue but the contract required any litigation to take place in Marcum’s hometown of New York, where the town lawyer is not licensed to practice. After a couple meetings among themselves, the council voted to make a $18,000 payment to Marcum on April 24 and obviously severed their relationship with the firm at the same time. The Sun article doesn’t explain where that figure came from but it seems the issue is resolved.

As for the town finances, Charlestown is in good shape. Total revenues were about $406k above budget, the town brought in $268k more in taxes than expected, and it has a total fund balance of about $10.9 million. Marcum’s report included several recommendations for improvement.

The post Tiny Rhode Island Town Settles Its Billing Beef With Marcum Over Out of Scope Services appeared first on Going Concern.

Around this time, we got a tip that Marcum was being seriously courted by private equity and likely to complete a deal soon. Our tipster didn’t have much more information than that so we shelved the tip and waited to see if more info came in. It did not.

The EisnerAmper deal was the first time a top 20 firm hooked up with private equity and according to the profession’s resident expert of wheeling and dealing Allan Koltin of Koltin Consulting Group, it certainly wouldn’t be the last. As we watched the talent shortage wreak havoc on firms large and small, it was expected that accounting firms would seek out all variety of mergers to bolster their staff numbers which has so far played out exactly as my psychic told me it would. And to help with these mergers, private equity was hovering around ready to inject cash into accounting firms.

Said Koltin in 2021 to Journal of Accountancy:

I would make a bold prediction here that in the next month, there will be a second top 20 firm to go the way of private equity. But I wouldn’t stop there. I think we could wake up a year from today and there could be no less than three, maybe even as many as four, of the top 20 CPA firms owned by private equity.

Well that didn’t exactly play out among top 20 firms but the economy sucks right now and something-something interest rates so we’ll blame that rather than suggesting Allan’s clairvoyance is not trustworthy. That said, smaller but not tiny firms like Citrin Cooperman and Cherry Bekaert jumped on the private equity train since he made that prediction and once again JofA tapped Koltin to share his expertise as the final boss of consultants. “Of the top 20 [public accounting] firms, more than half of them are in some type of transformative discussion — and a big part of that transformative discussion involves private equity,” he said in February.

Fast-forward to this week and we got this tip:

Marcum has started RIFs across all admin and operations due to their PE deal that has been signed.

We’re told that this reduction in force will soon extend to professional groups and that the employees acquired through the Friedman deal are particularly impacted.

I did a search for a news release on a Marcum PE deal because God forbid I work up a tip as a rumor when it’s actually a fully transparent deal that’s already been announced. That’s when I came across this Reddit comment from a month ago:

They will sell to private equity soon. Jeff has built up the firm to do just that. They are shopping themselves around to PE now and it will likely happen in the next 2-5 years.

New partners are salaried until (I think) 5 years in as partner and then depending on if Jeff likes you or not, you may get some (small) equity.

Jeff is a fucking maniac but you have to hand it to him, he built that firm from a small, one office firm into what it is now. He will sell out to PE for hundreds of millions of dollars. I wouldn’t want to be anything except an equity partner there at the moment though. They will get a nice payday but everyone else and future staff will suffer due to PE having its claws in there. Just my $0.02.

Huh. So maybe there is something to this.

As mentioned above, our tipster says so far it’s only admin getting the boot. And we don’t have confirmation of an inked PE deal, only the understanding that Marcum has been hungry for it for some time now. As of now, this is but a rumor. If you have more info, gimme a shout.

Update: we’ve received confirmation our intel is good regarding Marcum’s dip into private equity. Don’t have many more details beyond that at this time.

The post Rumor Has It Something’s Going Down at Marcum (UPDATE) appeared first on Going Concern.

She writes:

Over the past 12 months, I have met countless motivated, hardworking individuals that are interested in pursuing a career in accounting. However, many of those same candidates expressed their frustration as they struggle with the financial commitment of obtaining 150 credit hours to become a certified public accountant (CPA).

Many students are eager to enter the workforce full time and make a living. Some of the most inspiring students we meet with are working 30 to 40 hours a week on top of their academic courseload to make ends meet.

They continually share that any dollar invested in education needs to have a clear value proposition. The goal for many is to complete necessary coursework and start working at the earliest opportunity, nothing more.

The value proposition is something I wrote about last year, back before the Wall Street Journal gave a shit about the accountant shortage. Allow me to resurrect that paragraph:

The accounting profession has a critical value proposition problem — it has consistently failed year after year to demonstrate that it offers enough perks to make up for the downsides. The profession asks students to commit five years of their life plus however long it takes to study for a difficult professional licensing exam oh and also you’re going to be doing 70 hour weeks in a good week while living with four roommates for the first couple years but don’t worry, one day you’ll make some good scratch. You just have to get through a very unpleasant gauntlet first. If you express any discomfort about this process, you’re labeled a punk who can’t hack it in public by people who also can’t hack it because no one can but they do it anyway and say nothing because their university professor told them if they don’t shut up and take it they’ll be marked unemployable for the remainder of their career.

Back to Jen and her LinkedIn post. She says that the Minnesota initiative is “opens [a] much-needed pathway to licensure and that the “conversation and remedy is years in the making.”

Minnesota has argued, and Jen seems to agree, that whether a person has 120 or 150 units, it doesn’t matter as long as they can pass the CPA exam. In other words, the exam is perfectly sufficient as a barrier to entry to keep out the riff-raff. As anyone who has taken it knows (and though I never took it, I sat through hundreds upon hundreds of hours of CPA review class and served as therapist to many CPA exam candidates over the years so I can say with confidence I have a general idea), it requires you to know a little bit about a lot of things and just getting through the entire process is a test by itself. Licensing bodies oversee the application process and can purge “undesirables” before they get that far. So enough bouncers already exist without the profession needing 30 arbitrary college units to really really weed people out.

Critics of the legislation argue that adjustments to the credit requirement may impact the quality of accounting candidates entering the profession. However, there is no empirical evidence to suggest that the 150-hour requirement has elevated our profession. In reality, we’ve experienced a shortage of talent that continues to accelerate. Before the current rule was implemented, the industry welcomed top talent that currently comprises far-reaching leadership positions with crucial experience navigating the country’s biggest economic crises. I can see a clear plan where this legacy and standard of work can continue without the additional 30-hour course requirement.

In reality, the uniform CPA exam is our mechanism to provide talent with the technical acumen to serve in today’s world. Just as this exam has continuously evolved, so must our certification process.

She references the lack of empirical evidence to suggest that the 150 hour rule has elevated the profession. Not only is there little to no evidence, there is evidence that the 150 hour rule decreases CPA candidates, and we’ve known this for a while. See: “Occupational licensing and accounting quality: Evidence from the 150-hour rule” by John Barrios, a professor at the University of Chicago Booth School of Business. He found a 15% reduction in first-time CPA exam candidates after the 150-credit requirement was implemented, a decline that aggregates over multiple years. AND he found that the 150 rule did not actually improve the quality of talent. So not only did it function a little too well as a barrier to entry, it did not lead to better CPAs like it was supposed to. Which, duh. But boy do we have some expert basket weavers in the profession.

“I myself graduated from college when you needed only 120 credit hours plus work experience. As someone who could not afford another day of college after graduation, I can honestly say I wouldn’t be in my current role if the 150-hour requirement was enacted when I was working on my CPA certification,” writes Jen.

“Minnesota’s proposal marks tremendous progress in attempting to remove a barrier to entry by broadening the pathways and increasing accessibility to the accounting profession. To tackle declining numbers of new talent and be sustainable well into the future, we need to double or even triple the number of students who choose accounting as a major and stick with it through graduation and beyond. Broadening the pathway to become a CPA has the potential to increase the number of CPAs overall and encourage hard working, diverse talent to join the profession.”

“Our hope is that, with the exemplary action taken by Minnesota, this legislation can spur a national dialogue that challenges the current licensure requirements and empowers the accounting profession to look inward at how it welcomes and fosters prospective talent.”

I will say this. From where I am sitting and from feedback I have received from readers, lurkers, and other citizens of the CPA peanut gallery, the AICPA’s stance on Minnesota’s proposal does not vibe with the general consensus. All the comments I saw on Jen’s post are also in agreement that something must be done, and maybe offering an alternative to 150 units is a good start. It is my hope that more stakeholders, leaders, and educators will speak up and share their views publicly as Jen has. Even if they disagree.

If you have an opinion on alternative pathways to CPA licensure please feel free to reach out and weigh in, your viewpoints are important and better inform our coverage on this topic. Remember also to contact your state board of accountancy and let your voice be heard. They don’t read Going Concern comments. At least I hope not.

Earlier:
The Accountant Shortage Isn’t Bad Enough For NASBA to Entertain Dropping the 150 Hour Requirement
Minnesota Throws TPTB the Finger and Introduces Legislation to Offer an Alternate Pathway to CPA Licensure
The Beef Between the AICPA and Minnesota Over the 150 Hour Rule Heats Up
MNCPA to Educators: “We Do Not Need New CPAs Who Have Additional College Credits; We Need More CPAs, Period.”

The post One of Minnesota’s Largest Accounting Firms Can Totally Get Behind the Alternative Pathway to CPA Licensure appeared first on Going Concern.

Baker Tilly’s new CEO Jeff Ferro says the company will continue its highly acquisitive streak, expanding into new markets in the Southeast and beefing up its presence in major metros after the abrupt departure of its former CEO Alan Whitman in March.

Ferro, who has committed to a two-year term as interim CEO during an executive search, told Bloomberg Tax that Baker Tilly aims to solidify its presence in Florida and Georgia, and “double down” in major metro areas like New York, San Francisco, and Los Angeles. Potential mergers with “four or five” other firms have been discussed with senior leadership, he said. The firm also plans on executing its “break the mold” strategy hatched under Whitman, implementing programs like placing new hires in an innovation lab to cull suggested changes and improvements.

Side note: “placing new hires in an innovation lab to cull suggested changes and improvements” sounds like some kind of torture chamber where they force new hires to say brutally honest things about the firm under threat of waterboarding. Let’s hope they film it and put it on YouTube.

Anyway, given that Jeff Ferro “has guided several successful acquisitions by Baker Tilly” per his bio, one has to wonder if Alan was standing in the way of these big fancy mergers I was sure were coming down the pipe and the interim CEO…isn’t? Another Bloomberg Tax piece says that Whitman resigned after he disagreed “with the firm’s other top leaders on how to advance an aggressive and unique business strategy,” and that he aligned with the BT board on strategy but not execution. Take from that what you will.

Baker Tilly has been making moves. Big, obvious, expensive moves. A flashy merger would be a great culmination of those moves.

But then the question is: with whom? CLA? That would make a firm with a combined revenue of $2.8 billion, knocking BDO out of 6th place (per INSIDE Public Accounting Top 500 data). But then CLA is another Midwest-y firm and that wouldn’t align with getting a foothold outside of Chicago.

No, it’ll be something way less flashy than that. Here are Baker Tilly’s last five acquisitions, in descending chronological order:

ACG (Bay Area)
Henry+Horne (Arizona)
True Partners Consulting
Management Partners
Bader Martin (Seattle)

Will Baker Tilly’s next acquisitions be flashier than Bader Martin’s $20 million in revenue? Or Henry+Horne’s $34 million? Probably. How much flashier is the question.

Speaking of flashy, there was also the acquisition of Squar Milner ($130 million in revenue) in 2020 which pushed Baker Tilly into the top ten.

Whatever it is, I hope it’s a name we recognize. There are a lot of firms up for grabs right now and a lot of talent problems that can be soothed by merging in already-hired talent. Keep an eye on this Jeff dude, he’s making moves. Oh and if you hear any merger buzz, do get in touch.

The post Baker Tilly Will Be Making Moves appeared first on Going Concern.

Bloomberg News has more:

The consulting giant, which has seen rapid growth in its headcount over the past decade, is restructuring how it organizes its support teams starting this week, including workforce reductions or moving people into other roles. The total cuts will amount to about 3% of headcount that has ballooned to almost 47,000 from 28,000 just five years ago and 17,000 in 2012.

The total number of cuts were described by a person with knowledge of the matter, who asked not to be identified because the information isn’t public. A spokesperson declined to comment.

“The painful result of this shift is that we will have to say goodbye to some of our firm functions colleagues, while helping others move into new roles that better align to our firm’s strategy and priorities,” Bob Sternfels, global managing partner, wrote in a note to staff. “Starting now, where local regulations allow, we will begin to notify colleagues who will depart our firm or be asked to change roles.”

The company, where it can, is “implementing reductions through attrition or voluntary departures,” Sternfels wrote.

In February, a source told Bloomberg News McKinsey was looking to get rid of about 2,000 people, with a focus on non-client facing support roles:

Under a plan dubbed Project Magnolia, the management team is hoping the move will help preserve the compensation pool for its partners, the people said, asking not to be identified discussing non-public information. The firm, which has seen rapid growth in its headcount during the past decade, is looking to restructure how it organizes its support teams to centralize some of the roles.

Consulting layoffs since February 2023:

• Accenture: 19,000 (note: like McKinsey, lots of admin people got flushed in this 2.5% reduction in headcount)
• BDO USA: 85 (we are hearing of more cuts coming down the pipe but nothing solid yet)
• KPMG: 700-ish (less than 2% of the workforce)

Global demand for consultants is still higher than it’s ever been so if you’re keeping your nose clean, keeping clients happy, and getting the work done from somewhere other than the back office you’re probably fine. Unless you work for BDO USA but…

The post Layoff Watch ’23: McKinsey Joins the 2023 Consulting Culling appeared first on Going Concern.

While we continue to hire, especially to support our strategic growth priorities, during the second quarter of fiscal 2023, we initiated actions to streamline our operations and transform our non-billable corporate functions to reduce costs. Over the next 18 months, these actions are expected to result in the departure of approximately 19,000 people (or 2.5% of our current workforce), and we expect over half of these departures will consist of people in our non-billable corporate functions.

And:

During the three and six months ended February 28, 2023, we recorded $244 million in business optimization costs, primarily for employee severance. As part of these business optimization initiatives, we expect to record total costs of approximately $1.5 billion, with approximately $800 million in fiscal 2023 and $700 million in fiscal 2024. The $1.5 billion is expected to consist of $1.2 billion of employee severance and other personnel costs and $300 million related to the consolidation of office space. The actual amount and timing of costs are dependent in part upon local country consultation processes and regulations and may differ from our current expectations and estimates.

Accenture reported revenue of $15.8 billion, a 5% increase (in USD).

There’s also a fun section in the quarterly report called “People Metrics” that flexes a utilization rate of 91%:

Utilization for the second quarter of fiscal 2023 was 91%, compared to 92% in the second quarter of fiscal 2022. We hire to meet current and projected future demand. We proactively plan and manage the size and composition of our workforce and take actions as needed to address changes in the anticipated demand for our services and solutions, given that compensation costs are the most significant portion of our operating expenses. Our workforce, the majority of which serves our clients, increased to approximately 738,000 as of February 28, 2023, compared to approximately 699,000 as of February 28, 2022. The year-over-year increase in our workforce reflects demand for our services and solutions, as well as people added in connection with acquisitions.

You can find Accenture’s March 23 10-Q and 8-K on their site here.

Photo by Maksym Kozlenko

The post Layoff Watch ’23: Accenture is ‘Streamlining Operations’ But Don’t Worry, It’s Mostly Back Office Staff appeared first on Going Concern.

As you may recall, Trump Organization used to be Mazars USA’s problem until Mazars cut ties and disavowed ten years of statements of financial condition. According to the AG’s filing, the Trump Organization “settled” on Whitley Penn after the Mazars breakup so now it’s their problem.

Let’s see what her beef is.

After a frantic search, the Trump Organization settled on the firm of Whitley Penn, LLP (“Whitley Penn”) based out of Fort Worth, Texas to perform audit services, compilation services and tax preparation services, including the preparation of an SOFC for the year 2021. That SOFC was then submitted to lenders including Deutsche Bank to satisfy covenants on hundreds of millions of dollars of loans. The work was performed in New York pursuant to a Nondisclosure Agreement drafted under New York law, on companies managed out of an office at 725 Fifth Avenue in Manhattan, and included the preparation of New York State tax returns.

As a result, on February 14, 2023, The New York State Office of the Attorney General (“OAG”) served a Subpoena Duces Tecum and Ad Testificandum (the “Subpoena”) on nonparty Whitley Penn, LLP (“Whitley Penn”) seeking (1) documents and communications that are material and relevant to the instant action, and (2) deposition of a Whitley Penn partner who was involved in transactions and occurrences relevant to this litigation.

Said James, Whitley Penn has not produced relevant documents and has asserted an “inapplicable” Texas privilege (Accountant-client privilege, Texas Occupations Code § 901.457). This doesn’t apply, she says, because Whitley Penn has substantial contacts in New York, is licensed to do business in New York, is licensed as a CPA firm in New York, and is actively engaged in audits, compilations, financial statements and New York State and City tax filings for almost everyone listed as a defendant in her civil case, as well as dozens of other Trump Organization entities.

Under CPLR [Civil Practice Law & Rules], the Court can order compliance with a subpoena if the Court has jurisdiction over the recipient and the disclosure sought is material and necessary to the action. Here, there is no dispute as to the relevance of the material sought: Neither Defendants nor Whitley Penn has raised such an objection, and, in any event, their time to do so has passed. The only objections Whitley Penn has raised are service and a purported Texas privilege that New York courts have held inapplicable in New York courts. Whitley Penn’s objections are meritless, and the Court should order compliance.

The filing goes on to elaborate in further repetitive detail about why the court can compel Whitley Penn to give up the documents. Among the reasons given: “the accountant-client privilege Whitley Penn has raised is not recognized in New York, was waived when Defendants produced over 5,600 communications between the Trump Organization and Whitley Penn, and may be obviated by an order of this Court in any event.” That and “one of Whitley Penn’s key partners on The Trump Organization engagements personally applied for and received a CPA license from NYSED [New York State Education Department].”

SO. The firm is licensed to operate in New York, the lead engagement partner has a New York CPA license, and Trump Organization is based in New York therefore the AG has every right to get those documents. Got it.

Full filing for your reading pleasure:

Whitley Penn NY Trump Crap by Adrienne Gonzalez on Scribd

Somewhere in South Carolina right now Rick Davis is breathing one hell of a sigh of relief that this isn’t his problem.

The post Whitley Penn Finds Out New Yorkers Do Not F*** Around appeared first on Going Concern.

The release:

Leading advisory CPA firm Baker Tilly US, LLP (“Baker Tilly”) today announced that after 20 years of dedicated service, Alan Whitman has resigned from his role as chief executive officer and chairman of the board with immediate effect. Jeff Ferro, regional managing partner, has been appointed interim chief executive officer and Jeffrey DeYoung, managing partner, has been appointed chairman of the board of partners (the “Board”).

“In just five years, we at Baker Tilly have doubled our workforce, expanded our footprint nationally and internationally with 19 successful combinations, and secured our position as a Top 10 advisory CPA firm with a distinct global brand,” said Managing Partner Jeffrey DeYoung. “Alan Whitman was instrumental in leading Baker Tilly to become one of the fastest-growing advisory CPA firms in the U.S.”

DeYoung continued, “In the midst of this significant period of growth, Jeff Ferro brings experienced leadership and a strong track record of operational excellence. Jeff, along with our entire Baker Tilly team, are focused on our mission to enhance and protect our clients’ value. Together, we are excited for our future as we advance our long-term strategy.”

Jeff Ferro is a 35-year veteran of the profession. He currently leads Baker Tilly’s eastern and central regions and is known for his business acumen and skill in developing next-generation talent. Previously, Ferro served as president of ParenteBeard and led its merger and integration in 2014 with Baker Tilly. Since that time, Ferro has guided several successful acquisitions by Baker Tilly.

“I am honored for the opportunity to lead Baker Tilly during this time of transition and thank the Board and my Partners for their confidence,” said Ferro. “Baker Tilly is an exceptional organization with exceptional people and exceptional clients. I look forward to collaborating across our firm as we create the advisory CPA firm of the future, today.”

DeYoung continued, “Alan’s impact on our organization and our lives is undeniable. We are grateful for his significant leadership and wish him the best in his next endeavors.”

“As my two-decades career with Baker Tilly comes to an end, it has been an absolute privilege and honor to serve as CEO for the past seven years,” said Alan Whitman. “I am proud of our organization’s resolve to reimagine the workplace and uphold our purpose to unleash and amplify talent. I am confident in the leadership of Jeff Ferro and Jeffrey DeYoung and know that along with the abundant talent at Baker Tilly, the firm’s future is bright.”

We have received text of the email that went out to Baker Tilly staff earlier today and are including it below for your reading pleasure.

If you have more information or would like to share your feelings on this sudden news, get in touch.

Happy trails, Alan! Wherever you may go from here.

The post Alan Whitman Is Suddenly No Longer Baker Tilly CEO As of Today appeared first on Going Concern.

I mention her net worth because a recent Puget Sound Business Journal article discussed Baker Tilly — along with Seattle’s Moss Adams — in an article about the difficulties firms are having recruiting young people. It is, as you would expect, full of lots of dumb ideas that don’t start with Sal and end in ary.

This is from “The new math in recruiting at accounting firms”:

When they’re not striving for the pinnacle of their sports, internationally famous mountaineer Jimmy Chin and teenage tennis phenom Coco Gauff are promoting accounting firm Baker Tilly as brand ambassadors.

The press releases drop phrases like “new horizons” and “blazing new trails” to maximize the star power in an industry typically noted for its stodginess. It’s part of a larger trend of accounting firms trying to find young talent as the industry wrestles with staffing shortages.

“Baker Tilly’s purpose is to unleash and amplify talent – to help our people discover their strengths, sharpen their skills, deepen their knowledge, explore possibilities and soar to personal heights,” said Baker Tilly CEO Alan Whitman. “Coco Gauff embodies this very spirit.” He said the same thing in regards to the partnership with Chin, just changed a few details: “Baker Tilly’s purpose is to unleash and amplify talent – to help our people discover their strengths, sharpen their skills, deepen their knowledge, explore possibilities and soar to personal heights,” he said. “Jimmy Chin knows all about soaring to personal new heights.” (he does)

Accounting firms in the Pacific Northwest are particularly challenged when it comes to standing out as employer of choice against Amazon, Microsoft, and numerous other tech outlets that pay better than firms in the Pacific Northwest do. So they’re pitching experience as the draw:

Local accounting firms pitch the breadth of experience young accountants gain working for them.

“You’re getting exposed to a lot of variety and a lot of industries,” said Kelly Nelson, Seattle managing partner for Baker Tilly. “We have access to some of the greatest minds in the Seattle landscape through who our clients are.”

Nelson acknowledges that, more so than in the past, young accountants do have the option to start their careers as in-house accountants in a specific field. She said, however, that it’s hard for young accountants to know what field is a best fit before gaining broader experience at a public accounting firm.

I’m not going to spend all day hunting down figures but I found something from 2019 that says the average entry-level Amazon salary for computer science majors is $108,000 plus bonuses, extrapolated from this r/cscareerquestions thread. Do yourself a favor, don’t look at it. We’re working on a more thorough comparison of starting salaries for compsci vs. accounting that should be ready shortly which I also recommend not reading because it is depressing. But that is where the talent is going, and not because their new employer has the coolest celebrity endorsements.

I had to scroll way too far down in the business journal piece before I found any mention of pay, which finally came after a brief mention of CPA exam perks — paid time off to take the exam at Baker Tilly, a bonus for passing the exam from Moss Adams. They also got the Seattle managing partner at Deloitte to say the firm provides bonuses and reimbursements for passing the exam if you knock it out within a certain time after hire, pretty sure it’s $5,000 within a year plus paid study materials (feel free to correct that in the comments if wrong). TL;DR: firms “are prioritizing better pay for accountants.”

There are positive signs in the industry. [University of Washington accounting department chair David] Burgstahler said firms are prioritizing better pay for accountants, and the profession is very recession-proof, making it more popular if the economy continues its current downturn.

Ugh, not this again.

I know we have been banging the salary drum hard lately but come on, celebrity endorsements!?

Here’s what Glassdoor has for average Baker Tilly US salaries. I imagine this is what potential recruits are looking up first, not “which accounting firm does Jimmy Chin think is cool?” But what do we know

The new math in recruiting at accounting firms [Puget Sound Business Journal]

The post Baker Tilly Banks on Celebrity Endorsements to Bring in Young Talent appeared first on Going Concern.

Today was a difficult day for our practice — we reduced our workforce by 85 professionals. Saying goodbye to colleagues is never easy, and we appreciate each individual’s contributions to our business and our firm. We wish them the very best.

These cuts are now the second consulting cuts at a large U.S. accounting firm in as many weeks. KPMG let about 700 people go on February 15.

It was only a few months ago that well-respected advisory leaders at BDO USA abruptly left the firm and left staff wondering what happened and why these partners seemed to hastily vanish almost overnight. We still don’t know what happened there though we do have some ideas.

We are digging around for more info, if you have some feel free to give me a shout.

The post Layoff Watch ’23: BDO USA Cuts 85 People in Advisory, Wishes Them the Very Best on the Way Out the Door appeared first on Going Concern.

Mayer Hoffman McCann P.C. (“MHM”) has updated its logo to represent the dynamic firm’s strong, sustained growth as well as its ongoing upward trajectory. The contemporary look reflects MHM’s rich history dating back to 1954 and rise to becoming a top national accounting firm. MHM is an independent CPA firm providing audit, review and attest services, and is associated with CBIZ, Inc., a business consulting, tax and financial services provider.

The refreshed logo comes as CBIZ updates its own corporate logo, and features similar attributes, including brightened green and blue coloring and the vector imagery.

“Our firm has experienced unprecedented expansion in both size and talent, and our new logo encompasses that momentum,” said Andrew Gragnani, President of MHM. “As accounting professionals, we are constantly evolving to meet the unique needs of our clients and fully understand their financial picture, and our modernized logo reflects our ability to change with the times without losing sight of our core values and mission.”

With a 69-year legacy, MHM remains an accounting firm with a strong reputation. This can be attributed to its deep understanding of clients, represented in its tagline, “Knowing You.” The firm is dedicated to providing premier service by sticking to its core values of integrity, stewardship, diversity and inclusion, excellence and coming together as one firm. MHM’s focus on its people, processes and culture positions the firm to continuously provide high-caliber service, securing its prominence in the industry and continued growth.

“Brand images are often the first impression people have of a business, and this refreshed logo symbolizes the promising future of MHM without neglecting the long, rich history of the organization,” said Gragnani. “Following years of historical success for the firm, it felt like the right time to unveil a forward-looking, modern logo to better present the extraordinary value proposition MHM has to offer.”

And CBIZ:

CBIZ, Inc., a leading provider of financial, insurance and advisory services, unveils its new logo today to better reflect the 27-year-old company’s growth in size, scope, service offerings and team, as well as its plans for continued innovation as a recognized leader in professional services. The modernized look tells CBIZ’s story from its founding to today, and its growth over time through acquisition of best-in-class firms that have enabled the company to offer a breadth of services and depth of expertise unmatched in the industry.

The logo features new bold colors and typeface while also maintaining the vector from the historical logo. The vector is central to the “One CBIZ” core value, illustrating the power of many coming together as one to accelerate growth.

“We are proud to share our new logo which reflects both CBIZ’s history and our bright future,” said Jerry Grisko, President and CEO of CBIZ Inc. “Coming off a record year for growth in 2022, it was the right time to refresh our brand image and showcase our new logo as a symbol of the unique value that we bring to our team members and clients through ‘the power of many coming together as one to accelerate growth.’”

Mark Waxman, Chief Marketing Officer of CBIZ, added: “Brand images are most successful when they truly reflect the values and mission of the organization. In this case, the vector image is far more than a graphic element. Its meaning truly tells the story of who we are and why we do what we do.”

As a leading national provider of professional services, CBIZ’s mission is to provide exceptional advice and solutions to help clients achieve their goals, as well as be recognized as the premier provider of accounting, insurance, and advisory services. CBIZ continues to grow and strengthen its service offerings, including comprehensive and innovative solutions that assist clients with their most important growth opportunities and most urgent challenges.

CBIZ also pursues growth through strategic acquisitions, including the recent acquisition of Somerset, a leading tax and accounting firm headquartered in Indianapolis, Indiana. This innovative approach, coupled with a keen focus on client service, investing in people and building an award-winning culture, has propelled CBIZ to the top of the industry.

Although it feels like they used “leading” way too many times in that news release it only appears thrice. Trust me, I CTRL-F’d.

Here’s the old look:

What do we think? I took a graphic design class in 1997 so can say with some authority that the new logos are an improvement.

The post CBIZ and MHM Get a Makeover appeared first on Going Concern.

Mazars, the international audit, tax and advisory firm, today releases its global financial results for the 2021/2022 financial year, highlighting double-digit year-on-year growth of 16.4%, reaching €2.45bn in fee income. The increase in revenue comprises strong growth across all regions and services, both audit and non-audit (full details below).

We’ll save you scrolling through multiple paragraphs of CEO and Chairman of Mazars Group Hervé Hélias stroking himself off over proudly touting the firm’s strong international position, uniquely integrated model, and diverse portfolio of services and just skip straight to the highlights. Just imagine this guy is delivering these bullet points directly to you.

• Fee income as at 31 August 2022: €2.45bn ($2.61 billion USD)
• Double-digit year-on-year growth at 16.4%, including forex impact of +2.9% and 13.3% organic growth
• Growth in service lines:
  • Audit (43%) +15.5%
  • Consulting (11%) +9.6%
  • Financial advisory (8%) +29.7%
  • Legal (2%) +18.6%
  • Outsourcing (18%) +14.3%
  • Tax (18%) +15.9%
• Growth in regions:
• • Africa & Middle East +21.7%
  • Americas +22.4%
  • Asia Pacific +17.1%
  • Europe +14.6%
• Six new countries in Mazars’ integrated partnership: Bosnia and Herzegovina, Burkina Faso, Latvia, Lithuania, North Macedonia and Zimbabwe.

The firm included this note under Audit: Mazars audits 2,700 public interest entities worldwide, of which 1,300 are headquartered in Europe and 960 are listed on a regulated market, including 480 listed in Europe. Mazars is ranked fifth in the European audit market for listed European companies.

“2022 was an eventful year that tested the agility of companies everywhere,” said cool European dude. “These disruptions, coming on top of longer-term trends including digitisation and sustainability, can be challenging, but they also offer vast opportunities to grow, develop and explore new ways to create value. In this unsettled context, Mazars’ role, more than ever, is to be a trusted partner to clients.”

In the United States, Mazars has put any icky associations with controversial former presidents behind them to focus on growth:

Growth in the US spanned all our key sectors and service lines across Public Interest Entities and Privately Owned Business. The Mazars international platform is a key differentiator in achieving growth from existing and new clients. In 2022, our growth was boosted by the expansion of our capabilities, teams and service offerings in several tax specialties; risk and cybersecurity; transaction services; and audit services. We also launched ESG as a new service offering with a focus on helping clients develop and implement sustainability strategies and business models aligned with ESG best practices. Additionally, the recent acquisition of Boston-based professional services firm Samet & Co. significantly increases our footprint in the northeastern US. The acquisition adds over 65 professionals in Massachusetts to the Mazars team.

“Our revenue growth in 2022 demonstrates how we effectively delivered against our strategic plans by providing high-quality solutions across our service lines and sectors in key US markets,” said Victor Wahba, Mazars US Chairman and CEO. “We made significant investments improving our technology and growing our teams to support the dynamic, ever-evolving needs of our clients. We will continue to invest in the professional development of our people, digitization, and technology to ensure continued and sustainable future growth.”

Mazars reiterates that the foundation of its 2022 growth lies in the grab bag of professional services currently on offer at the firm. The firm is convinced this diverse portfolio is essential to the quality of audit, the relevance of the services rendered to clients, the attraction and retention of the best talent and, ultimately, the public interest, read the press release.

Talent got a small mention at the very bottom of the press release, under the “Beyond financials: technology and sustainability as key business priorities to retain talent, foster quality and enhance client experience” section. The firm says that it is investing in technologies that both improve the client experience as well as enhance the work of its auditors, the latter supposedly being something that entices young auditors to come work for the firm that has the coolest toys.

City A.M. took an optimistic view of Mazars’ results, saying its 37% audit business growth in the UK “pushes to tackle Big Four’s dominance.” The smallest Big 4 firm across the pond is KPMG UK with £2.7 billion ($3.25 billion) in revenue, an increase of 16% in the 12 months to September 30 2022. Mazars UK business meanwhile brought in £274 million ($329 million), though overhead increased to £69.7 million due in part to the 1,000 people Mazars hired. So a challenge to Big 4 is quite a ways off, we’d say.

Mazars’ record global revenues confirm strength of its international, integrated, multidisciplinary strategy [PR Newswire]

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The FRC’s aggressive stance on audit quality and the increased attention that comes with it are not going over well at the mid-tiers according to an opinion piece by Michael O’Dwyer published in Financial Times yesterday.

If the audit market was once a wild west, rife with cosy relationships and low standards, some in the profession feel the regulatory pendulum has swung too far in the other direction, potentially discouraging smaller players from stepping up.

For firms like BDO and Mazars, tighter regulation makes their aim of auditing more large listed companies costly and painful ahead of reforms that would require FTSE 350 companies to have part of their audits done by a non-Big Four firm.

“The regulatory pressure is becoming unbearable,” says a senior auditor at one mid-tier firm of the demands from FRC supervisors.

The increased regulatory burden means the FRC is “cementing the oligopoly” of the Big Four, says a senior partner at another firm, lamenting the resources required to respond to constant requests from the watchdog.

This sudden heavy hand on the part of audit regulators couldn’t possibly be more ill-timed. Why couldn’t they get tough on audit quality back in 2010 when firms had a surplus of warm bodies to throw at audits? Now, with audits staffed by cardboard cutouts of seniors, they want to get extra tough on firms huh?

Writes O’Dwyer, the FRC isn’t stopping at mid-tiers. Of the 14 publicly announced audit investigations launched by the FRC in the past two years, nine have been against firms outside the Big 4, he says. Some of them you’ve never even heard of.

No article about mid-tier and lower firms would be complete without a totally unnecessary but hilarious dig at them. O’Dwyer did not let us down.

The firms also fear fines and reputational damage if things go wrong. Their concerns are well-founded given that FRC inspections have found work by auditors outside the top seven are of lower quality.

So any firm that isn’t BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars, or PwC sucks. Not that those seven are exactly killing it in the audit game either. Last July, the FRC called out Mazars and BDO specifically for “unacceptable” inspection results. Four of the eight audits reviewed at Mazars, and five of the 12 audits reviewed at BDO required more than limited improvements. This has brought increased scrutiny — “specific supervisory plans” — at these firms.

O’Dwyer says regulators cracking down on audit firms and their sloppy work was “overdue after years of bad practice” but coming down too hard on them could potentially push the smaller firms right off the map. Growth ambitions must also be tempered by a focus on quality first and foremost, said the FRC in its 2022 audit quality review. Meaning audit quality comes first, sub-Big 4 firms needing to upgrade their technology and push paper to keep the FRC off their backs is not really their problem.

The post Getting Tough on Mid-Tier Firms Will Only Cement the Big 4 Oligopoly, Says Audit Partner Whose Firm Needs to Git Gud appeared first on Going Concern.

Thomson Reuters has written up the 2022 ConvergenceCoaching, LLC® Anytime, Anywhere Work (ATAWW) Survey — you can request survey results here — and we learn that almost all responding firms say they are being flexible about where and when their people put in their time.

Of the 216 accounting firms that participated in the 2022 ATAWW Survey, 97% allowed their talent to choose where they work, while 94% offer flexibility in when people are working. The report notes that with more firms leaning into outsourcing, offshoring, and fractional staffing resources, it is increasingly important to learn to work asynchronously across multiple time zones. The survey also shows that surveyed firms are leveraging gig-based workers (30%), domestic outsourcing teams (30%), and overseas offshoring providers (35%).

With an increasingly tight talent pipeline, the report illustrates that leaders need to get innovative on staffing their teams. In fact, the 2022 ATAWW Survey found that “81% [of survey respondents] hired at least one remote team member they had not employed before,” which essentially means that firms are hiring new staff in their remote geography. It’s remarkable to note that this result was up from 38% in 2020.

A few bullets from the survey, including a familiar one that was just explained in the paragraph before this:

• 95% offer remote auditing, and the percentage who performed more than half their audits away from the client site soared to 54%
• 83% of firms allow Admin and Operations to work remote or blended
• 81% who employ remote talent hired a “stranger” outside their geography (up from 38% in 2020)
• 73% don’t dictate when extra hours are worked (no more mandatory Saturdays)
• 19% offer Unlimited PTO
• 12% close the office between Christmas and New years

No more mandatory Saturdays? We’re gonna need some confirmation on that. We’re also going to need confirmation on the 47% of survey respondents that say they close their offices on Fridays when things are slow; 1% of the firms surveyed say they give Fridays off year-round. We’re gonna need their names and HR contacts, thanks.

2022 ConvergenceCoaching® Anytime, Anywhere Work (ATAWW) Survey [ConvergenceCoaching]

The post Accounting Firms Are Being Uncharacteristically Modern About This Whole Remote Work Thing appeared first on Going Concern.

The Wall Street Journal has written a pretty detailed account of comments EY Global Chairman and CEO Carmine Di Sibio made to WSJ’s CFO Network Summit earlier this week, scroll down to skip past a bunch of words and watch the clip.

Of note, the split vote is now expected to happen in April. “I do see potential [further] delays because the deal is complicated,” Di Sibio said. Up until now we have heard “by the end of the first quarter.” As has always been the case, a worsening of market conditions could delay the vote but besides that, Di Sibio sees “no tremendous hurdles” standing in the way of the split. Nor have we heard of any.

We also found out that EY has chosen BDO to audit the liberated consulting arm and a bit about potential future branding. WSJ:

EY is hiring rival accounting firm BDO to check the books of the planned public consulting company, Mr. Di Sibio said. The new company—advising clients on tax issues, deals and more—needs a new brand, as the audit-focused partnership will keep the EY name.

Choosing a brand for the consulting arm is proving tricky, because most regular words have already been taken by brands, Mr. Di Sibio said. So the new EY consulting company name will have to be a made-up word, or a combination of two or three words, he added.

“I’ve lowered my expectations,” he said. “The way the name thing works is you’re going to hear the name. And you’re going to be like, ‘What?’ And then little by little it will grow on you, and eventually it will be a household name.”

Anyone else thinking about this?

When I close my eyes, I see this thing, a sign, I see this name in bright blue neon lights with a purple outline. And this name is so bright and so sharp that the sign – it just blows up because the name is so powerful… It says, “Dirk Diggler.”

Anyway, that’s your Project Everest update for the week. Video:

EY’s Split Faces ‘No Tremendous Hurdles,’ CEO Says [Wall Street Journal]

The post BDO Will Audit EY Consulting, or Whatever That Business is Gonna Be Called appeared first on Going Concern.

The full list of 30 firms costs $30 and we don’t have money like that so we’re looking at the five we can see for free. There’s a note at the top that “information was obtained from firm representatives through questionnaires and could not be independently verified by the Portland Business Journal” so keep that in mind.

Sharing this because it includes global CPA numbers and it’s probably good to document that so we can look back twenty years from now and tell our grandchildren stories about the time entities called “accounting firms” employed tens of thousands of people.

As you can see, Moss Adams comes in #1 with almost 100 CPAs working in Clackamas, Columbia, Multnomah, Washington and Yamhill counties in Oregon as well as Clark and Skamania counties in Washington (that’s how PBJ has defined “metro”). Deloitte employs the most non-CPA professionals in the area but just 71 CPAs, a mere blip against its worldwide 11,217 CPAs. As we know, Moss Adams is headquartered in nearby Seattle, Perkins & Co. and Geffen Mesher are local to Oregon.

Per its last headcount in 2022, Deloitte US employs 129,110 staff, 135,118 professionals total including PPMDs, and 21,279 administrative, bringing its total to 156,397. We’re elaborating on Deloitte because they appear to have the most CPAs globally and Googling “Deloitte US headcount” returned detailed information in under five seconds. Here, have the whole chart just because:11217

If the global CPA number above is correct, that means 2.7% of Deloitte’s global workforce of 415,000 are CPAs. Today we learned.

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But you know this article isn’t going to be praise for employee perks. No, we’re going to call out how CLA transparently discusses a rise in ‘musculoskeletal issues’ in their workforce that prompted them to partner with a group offering virtual physical therapy.

Employee feedback, [CLA managing director of HR Patrick] Bowes says, was the most critical driver of the changes to the CLA benefits strategy, which was also informed by claims data. For instance, leadership has seen a rise in short-term disability applications, and thus eliminated its tiered structure for eligibility, so that all workers are covered at 100%. Noticing the rise of musculoskeletal issues among the workforce, it instituted a new partnership with a provider that offers virtual physical therapy. It also rolled out an option that allows employees to seek second opinions and treatments related to complex diagnoses at some of the best care centers in the country—at no cost to employees.

“If I have something I need treatment for—we’re seeing things like cardiac issues, cancer, orthopedic things—I can travel to the best centers for that specific care, bring a caretaker with me, be treated on site there and never see a bill for it,” Bowes explains.

Can we talk about this? Surely it’s not only CLA seeing an increase in these issues, it’s just that they were the ones who decided to talk openly about it for this one article. Should we be concerned? Is this the profession’s real crisis and not the talent shortage? WHY DOES EVERYTHING HURT?

It is known that stress has physical consequences. You are probably holding a bunch of it in your jaw and shoulders as you read this (friendly reminder to take a deep breath, loosen your jaw, and gently roll the tension out of your shoulders). This is from an American Psychological Association article on stress effects in the body:

When the body is stressed, muscles tense up. Muscle tension is almost a reflex reaction to stress—the body’s way of guarding against injury and pain.

With sudden onset stress, the muscles tense up all at once, and then release their tension when the stress passes. Chronic stress causes the muscles in the body to be in a more or less constant state of guardedness. When muscles are taut and tense for long periods of time, this may trigger other reactions of the body and even promote stress-related disorders.

For example, both tension-type headache and migraine headache are associated with chronic muscle tension in the area of the shoulders, neck and head. Musculoskeletal pain in the low back and upper extremities has also been linked to stress, especially job stress.

Unfortunately it doesn’t end with tense shoulders. Stress can also cause respiratory problems, long-term problems in your heart and blood vessels, and it can even make you fat. Remember that old TV spot about cortisol?

p.s. That crap didn’t work.

Says APA:

Glucocorticoids, including cortisol, are important for regulating the immune system and reducing inflammation. While this is valuable during stressful or threatening situations where injury might result in increased immune system activation, chronic stress can result in impaired communication between the immune system and the HPA axis.

This impaired communication has been linked to the future development of numerous physical and mental health conditions, including chronic fatigue, metabolic disorders (e.g., diabetes, obesity), depression, and immune disorders.

Here’s Mayo Clinic on what happens to your body when stress is always high and the physical response to it that was originally intended to help our ancestors avoid immediate threats like large, scary animals stays on:

The body’s stress response system is usually self-limiting. Once a perceived threat has passed, hormone levels return to normal. As adrenaline and cortisol levels drop, your heart rate and blood pressure return to baseline levels, and other systems resume their regular activities.

But when stressors are always present and you constantly feel under attack, that fight-or-flight reaction stays turned on.

The long-term activation of the stress response system and the overexposure to cortisol and other stress hormones that follows can disrupt almost all your body’s processes. This puts you at increased risk of many health problems, including:

• Anxiety
• Depression
• Digestive problems
• Headaches
• Muscle tension and pain
• Heart disease, heart attack, high blood pressure and stroke
• Sleep problems
• Weight gain
• Memory and concentration impairment

Any of that sound familiar?

Friendly reminder to release the tension from your jaw again. And I’m just going to leave this here for anyone who might need it.

Why this accounting firm has rolled out 2 dozen benefits since COVID [Human Resource Executive]

The post Let’s Talk About Why ‘Musculoskeletal Issues’ Are on the Rise at This Accounting Firm appeared first on Going Concern.

Accounting firm merger madness continues, this time the union of Citrin Cooperman and Berdon announced on the 1st. We should have seen it coming as Citrin Cooperman has been busy the last 15 months, growing revenue by $200 million and completing several mergers since private equity firm New Mountain Capital acquired a majority interest in the firm last year.

Going off INSIDE Public Accounting Top 100 data, the union of #24 Citrin Cooperman ($351,776,000 in revenue) and #47 Berdon ($132,500,000) makes a combined force that could bump EisnerAmper out of the 17th spot on the IPA Top 100.

Press release:

Citrin Cooperman Advisors LLC (“Citrin Cooperman”), one of the largest and fastest growing professional services firms in the United States, announced today that they have completed their acquisition of the nonattest business of New York accounting, tax, and consulting firm, Berdon LLP (“Berdon”). With the addition of Berdon’s $110 million in revenue and 450 partners and associates, the combined firm anticipates annual revenue will exceed $600 million, handled by a team of over 2,400 professionals. The combination of the two firms will expand capabilities in their shared core industries including real estate, construction, family office, and manufacturing and distribution while providing and expanding a deep roster of consulting and advisory services for their combined clients.

“This is the combination of what we think are two of the strongest firms in the country,” said Citrin Cooperman Executive Chairman Joel Cooperman and Chief Executive Officer Alan Badey in a joint statement. “We have long admired Berdon and their well-earned reputation for client service and technical expertise. Our values, cultures, and industry niches align perfectly with each other, and we look forward to working closely with the Berdon team.”

Berdon Co-Managing Partners Mark Bosswick and Stuart Kotler shared similar sentiments, “Our team is incredibly excited to be joining Citrin Cooperman and that excitement stems from the clear synergies we see between our two firms and from the fact that we will now be able to offer our clients and personnel a wider array of resources and offerings.” Bosswick will become Citrin Cooperman’s New York Metro Managing Partner and a member of the company’s Board of Managers. Kotler will continue to serve as the managing partner of Berdon, which will continue to provide attest services to its clients and operate in an alternative practice structure with Citrin Cooperman.

Andre Moura, managing director of New Mountain Capital, which acquired a controlling interest in Citrin Cooperman in October of 2021, said; “The combination with Berdon represents an important milestone in New Mountain’s strategic growth partnership with Citrin Cooperman. Berdon brings a unique expertise and a strong reputation in the market and the combined firm will have greater technical capabilities, technology, and scale to better serve its clients. New Mountain Capital is excited to work with Citrin Cooperman as the firm continues its growth trajectory.”

Berdon marks Citrin Cooperman’s tenth transaction in the past 15 months, growing their revenue by over $200m and establishing new offices in Chicago, Miami and Beverly Hills. Allan Koltin, CEO of Koltin Consulting Group, Inc., and an advisor to both groups on the combination, commented, “Berdon was sought after by almost every major CPA and advisory firm in the country but chose Citrin Cooperman as the best strategic and cultural fit. Berdon’s leadership saw great growth opportunities for their talent and increased abilities to provide expanded depth and resources for their clients. Citrin Cooperman’s relationship with New Mountain Capital is transforming an already great firm into an amazing ‘firm of the future’. Their combined strategy is a rather simple one – grow your people, grow your clients, and everything else will follow.”

Effective today, Berdon’s nonattest business is a wholly owned subsidiary of Citrin Cooperman.

Hope you guys aren’t sick of hearing about mergers, we just heard about another big one that should be announced very soon.

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But that three-year streak of perfection came to an end, according to its recently released 2021 PCAOB inspection report. The firm messed up on one of its nine audits inspected, and it pertained to the financial statement audit only.

So that’s one mistake in the last 35 audits inspected, for a deficiency rate of 2.8%. If you include the last time Cohen & Company auditors screwed up an audit, which was in 2017, that’s two mistakes in the last 43 audits inspected, for a deficiency rate of 4.6%.

As the PCAOB noted at the bottom of the above graphic, Cohen & Company didn’t sufficiently evaluate significant assumptions that the issuer used in developing an estimate. The issuer in question is a registered management investment company in the financials sector with net assets under $1 billion. The PCAOB said:

The issuer held certain investments that were categorized as level 3 within the fair value hierarchy as set forth in FASB ASC Topic 820, Fair Value Measurement. The firm’s approach for substantively testing the valuation of these investments was to develop independent estimates. The firm did not evaluate the relevance of the pricing information and the appropriateness of another input the firm used in developing its fair value estimates of these investments.

It’s important to note that all nine of Cohen & Company’s audits inspected by the PCAOB during its most recent inspection cycle were financial statement audits only. No integrated audits of financial statements and internal control over financial reporting (ICFR) were reviewed. Compare that with, say, PwC, which during its last inspection had 47 integrated audits of financial statements and ICFR reviewed and nine more that were financial statement audits only. PwC has only made three mistakes in its last 108 audits inspected, for a deficiency rate of 2.8%.

We know Cohen & Company, the 51st largest accounting firm in the U.S. by revenue, isn’t on the same playing field as PwC, the second largest firm in the U.S. and in the world. But excellence—no matter how big or small—should be celebrated, especially during this time of dour audit quality. You can peruse Cohen & Company’s 2021 PCAOB inspection report below.

The post Turns Out Cohen & Company Auditors Are Human After All appeared first on Going Concern.

Image via CliftonLarsonAllen

CLA has merged with New Jersey’s SobelCo (a firm we’ve heard only good things about) and produced the obligatory press release about the union. Shout out to Allan Koltin, the prenuptial counselor of accounting firm marriages, who helped with the deal.

News release:

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“As CohnReznick continues to expand its capabilities and market presence, recognizing the talents and achievements of outstanding professionals is critical to our growth strategy,” said CohnReznick CEO David Kessler. “Our newly promoted partners will serve as key leaders across our industries and service lines—each having demonstrated a strong commitment to our clients, our people, and our communities. Our 19 new partners represent the future of CohnReznick and will play a critical role in helping to advance our clients’ goals, and our own, for many years to come.”

Let’s give a pat on the back to these 12 men and seven women for their achievement.

The class of 2023 is a bit smaller than last year’s crop of 21 new partners but is larger than the dozen promoted in 2020.

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• Global revenues increase by over 41% in three years
• Double-digit growth across all RSM regions for a second consecutive year
• 10% rise in headcount to 57,000 RSM professionals
• Network targets 100% growth in revenue by 2030

This $8 billion puts them just $26.6 billion behind smallest Big 4 firm KPMG, and a mere $4.8 billion off from nearest rival BDO.

Anyway, Stephens told FT that RSM is open to merger talks, if it’s a good fit.

“If there’s some deal or some big conversation to be had, absolutely we’ll look at that to see what does that mean, what does that look like for us,” she said in an interview with FT. “I think where there are willing parties then that’s what you start with [and then it’s a matter of] what [are] the goals and objectives and what’s the business deliverable that’s going to come from [it]?”

A big mid-tier merger would obviously put RSM and the future Mrs. RSM much closer to competing with Big 4, though she says that’s not the goal. “It’s such a big jump to . . . even the smallest of the Big Four that that’s not our ambition,” she said.

FT called her comments “the clearest public indication from a mid-tier accounting group that it would consider a large tie-up or other significant transaction” so keep an eye out, RSM may be working on something big. There are likely many conversations being had among the mid-tiers with the EY split in the works, whether any of these talks materialize into something tangible remains to be seen. Should something come of it, hopefully the marketers can come up with something better than FORVIS.

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MCM CPAs & Advisors LLP has, to my knowledge, never been mentioned on this website in the 14 years we have existed. And that ends today!

Kentucky’s largest accounting and advisory firm* announced on Tuesday they will be relocating their primary office in Louisville to the fancy PNC Tower at 101 South 5th Street this coming spring. BASK:

Completed in 1972, PNC Tower was the tallest building in Kentucky until it was ousted by the 549-foot (167 m) 400 West Market building in 1993. The 40-story, 512-foot (156 m) tower was designed by architects Wallace Harrison and Max Abramovitz, who were inspired by German-American architect Ludwig Mies van der Rohe (good read on that dude here).

MCM will lease approximately 35,000 square feet over two floors. Available spaces in the building are listed between $18/sq ft and $23/sq ft:

You can do the math on that.

“The decision was a difficult one,” said Brad Smith, Managing Partner. “Louisville has so many incredible areas for commercial real estate, but I’m excited that we reaffirmed our commitment to the Central Business District. A vibrant downtown is a critical factor in any city, and we are looking forward to continuing to call the central business district home for at least the next ten years.”

According to the firm’s press release, the hope is that this new space will allow for that precious in-person collaboration firm leaders want so badly to foster in this post-Covid, WFH world:

With their two floors in PNC Tower, MCM is focused on creating a space designed to foster community, collaboration, and creativity amongst team members and clients. PNC Tower’s vibrant Main Street location and site amenities will allow the firm to continue to attract and maintain the best talent as MCM continues to grow providing highly specialized services to its clients.

MCM has six offices in Louisville and Lexington, Kentucky; Indianapolis and Jeffersonville, Indiana; and Cincinnati, Ohio, and is #74 on INSIDE Public Accounting’s Top 500 list with revenue of $67,507,604.

*did not fact check this, just going to trust the press release because if you can’t trust accounting firms who can you trust ya know?

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“Our newest group of admitted partners exemplifies our focus on providing holistic services that help our clients succeed,” said Eric Miles, CEO and chairman for Moss Adams. “I’m proud to have this group join our partnership.”

That group includes these 23 men and 13 women:

• Matt Billings, Denver; National Tax
• Maria Braun, Seattle; SOC Examinations
• Erin Clayville, Seattle; Internal Audit
• Sasha Correnti, Seattle; Not-for-Profit
• Terry Dickens, San Francisco; Private Clients
• Halie Garcia, Albuquerque, NM; Internal Audit
• Derek Groff, Denver; Valuations
• Sara Harper, Santa Rosa, CA; Wine, Beer and Spirits
• Sheila Herrera, Albuquerque, NM; Manufacturing and Consumer Products
• Tommy Hiscocks, Los Angeles; Construction
• Benjamin Isley, Dallas; Technology
• Jared James, Seattle; IT Compliance
• Tan Le, Everett, WA; Aerospace and Defense
• Scott Leback, Portland, OR; Technology
• Ryan Luetkemeyer, Albuquerque, NM; Tribal and Gaming
• Aaron McFarland, Seattle; Wealth Management
• Kellie McKenna, Seattle; Financial Services
• Jackie Merrill, Eugene, OR; Food and Beverage
• ​​​​Matt Mueller, Denver; Manufacturing and Consumer Products
• Jeremy Nichols, San Diego; Construction
• Tim Oakes, Issaquah, WA; Development and Integration
• Daniel Olson, Silicon Valley, CA; Technology
• Chris Parker, Sacramento, CA; State and Local Tax
• Sid Paruthi, Silicon Valley, CA; International Tax
• Rae Paulson, Santa Rosa, CA; Wine, Beer and Spirits
• Linda Pei, Los Angeles; Manufacturing and Consumer Products
• Michael Pihowich, Los Angeles; Transaction Services
• Anthony Porter, Everett, WA; Financial Services
• Bradley R. Porter, Dallas; Transaction Services
• Corey Preugschat, Seattle; Manufacturing and Consumer Products
• Kimberly Sokoloff, San Francisco; Health Care
• Mathew Stopa, Everett, WA; Health Care
• Emily Tillis, Spokane, WA; National Assurance
• Aparna Venkateswaran, Orange County, CA; Health Care
• Chris Waetzig, Portland, OR; Wealth Management
• Brian Wong, San Francisco; Technology

Congrats to all! Now start making it rain.

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Back in August when it was announced that Guidehouse would be buying Grant Thornton’s public sector advisory practice, we wondered out loud if layoffs might be expected as they so often are in situations such as these. First, let’s do a quick refresher on the acquisition as reported in August:

A tipster reached out to us this morning to let us know the rumor mill is churning over Guidehouse potentially picking up GTPS. “This took some people by surprise when they read about it on Fishbowl,” our tipster said. This appears to be the post in question:

An unexpected 2 p.m. all-hands call was announced by noon and per our tipster, the deal is going through pending approval from antitrust regulators.

Things are moving quick: the deal is expected to close in 60 days, everyone will be sticking around (for now), and they anticipate the transition will be about a month and a half.

We were told that on that all-hands call in August, one person leading the call told staff no layoffs, the other said “no large layoffs.”

According to information we were provided today, approximately half of the old Grant Thornton partners who came to Guidehouse via the acquisition have been laid off. 12 specifically. And three MDs. So yes layoffs.

Grant Thornton’s media department did not entertain us when we asked about potential layoffs back in August, we imagine Guidehouse will take the same approach but we’ve reached out to them anyway.

Anyone with more info is welcome to use the contact information below. We’ll update if we hear more. Friendly reminder, this is as yet just a rumor.

Update:

A tipster has provided more information on the layoffs:

Seven were laid off this past Monday including the former head of all GTPS. In total your numbers are correct. There has been no communication from GH to employees about the layoffs which began in November.

Of course also on Monday was the kick off for 2023 meeting where it was announced the largest partner class had just been promoted.

Guidehouse did not respond to our request to comment.

The post Guidehouse Laid Off a Bunch of Old Grant Thornton Partners After the Public Advisory Practice Merger (UPDATE) appeared first on Going Concern.

A tipster from CliftonLarsonAllen told us on Monday, “$2,022 is how much the gift was to all employees. Very pleased with it. It was a complete surprise and appreciated by a lot of my colleagues. Especially with some other firms not giving out anything with a potential recession looming, it was well-received in my opinion. Some people probably won’t think it’s enough, but it’s better than nothing.”

If you received an end-of-year or holiday bonus from your firm, let us know by emailing us at editor@goingconcern.com or texting us at (202) 505-8885.

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Cryptocurrency-trading giant Binance said the accounting firm it uses to reassure customers that their money is safe has paused all of its work for crypto clients, and said the outflows from its platform had swelled to $6 billion.

Mazars, a midsize accounting firm that worked for former President Donald Trump’s company, published a “proof-of-reserves” report for Binance last week. As of Friday, Mazars had withdrawn that Binance report and similar ones for other cryptocurrency-trading companies from its website [Ed. note: that report can no longer be found on Mazar’s site].

A spokesman for the accounting firm said it had made the move “due to concerns regarding the way these reports are understood by the public.”

Only a handful of days ago, Mazars released an audit-but-not-really-an-audit of Binance that confirmed Binance had control over 575,742.42 in customer Bitcoin, worth $9.7 billion when Cointelegraph wrote the story up on December 7. “Binance was 101% collateralized,” Mazars said. Adding this disclaimer:

We make no representation regarding the appropriateness of the AUP [agreed-upon procedures]. This AUP engagement is not an assurance engagement. Accordingly, we do not express an opinion or an assurance conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported.

Meanwhile, Forbes reported yesterday that Armanino is shuttering its crypto practice completely and firing clients:

Armanino is ending its crypto audit practice and dropping clients, two sources familiar with the matter say.

The unit may be folding under pressure from Armanino’s non-crypto clients, concerned that reputational risk to the firm will throw their audits into question, according to a source with knowledge of the firm’s crypto offerings. Last month, Armanino was named in a class-action lawsuit for failing to catch irregularities at FTX.US after performing the exchange’s audit last year. The suit was filed by Stephen Pierce, an FTX customer who allegedly lost $20,000.

Armanino did not respond to requests for comment.

This is an developing story, there appears to be more info coming. Stay tuned.

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