Friday Footnotes: KPMG Partner Blames Juniors; Desperate Firms Look to India For Talent; EY’s Old Digs | 1.14.22

Posted on by Going Concern News Desk
a dog wearing a bear costume

Carillion tribunal: Former KPMG staff turn on each other [The Guardian] The former KPMG partner in charge of auditing Carillion’s accounts before its collapse has blamed his more junior colleagues for misleading regulators, as former team members turned on each other during a tribunal hearing allegations against the firm and six individual auditors.

Looking abroad: As accounting firms struggle to find workers, more and more are expanding overseas [ROI NJ] With a larger share of accounting firms tapping talent overseas, India-based offshore staffing firm Entigrity reports on its website that it has seen the amount of accounting firms with offshore workers rocket from about 6% before the pandemic to just over 40%.

Inflation is Back! What Should Internal Auditors Do Now? [Audit Beacon] When we think of inflation, our first thoughts are often about ourselves – my groceries, fuel, rent, etc. are going to cost more. Will my salary keep up? This is actually a good perspective to have when assessing potential risks to our organization. Hopefully, you’re not the first in your organization to be thinking about the impact of inflation. Hopefully, too, you will be able to engage management (including risk managers) as part of your assessment/validation of the risks.

AICPA Recognizes CPA Evolution Resource Competition Winners [AICPA] The American Institute of CPAs (AICPA) is pleased to announce the winners of the 2021 CPA Evolution Resource Competition (CERC) Awards. This competition seeks to promote the development of teaching resources for the new topics and learning objectives outlined in the CPA Evolution Model Curriculum. The Curriculum was designed to help accounting programs transition to prepare CPA candidates for the Core + Disciplines CPA Exam structure, which begins in 2024.

Profession intensifies diversity efforts with new CAQ initiative [Journal of Accountancy] The Center for Audit Quality (CAQ) announced a strategic initiative Wednesday intended to increase the diversity of the talent coming into the accounting profession while raising awareness of the profession’s diversity, equity, and inclusion (DEI) efforts.

Our pick for Tweet of the Week out here asking the important questions:

Roku to take part of massive office space left behind by EY in Times Square [Crain’s New York] The team at RXR Realty is breathing a sigh of relief now that television-streaming company Roku is taking over 240,000 square feet of prime office space at its 5 Times Square office tower that had been left behind by longtime tenant EY. The accounting firm, which has occupied the entire 1 million-square-foot building since 2002, moved its offices to the newly-built 1 Manhattan West in July–a big vacancy for 5 Times Square’s landlord to fill in a tricky office market.

New GootLoader Campaign Targets Accounting, Law Firms [Threat Post] Once prolific spreaders of REvil ransomware, the GootLoader malware gang has pivoted to actively targeting employees of law and accounting firms with malicious downloads. The Threat Response Unit from eSentire issued an alert about having over the past three weeks observed GootLoader attacks on three law firms and one accounting firm. WordPress vulnerabilities let the attackers easily hijack sites offering sample business agreements for professionals, the eSentire report explained. The researchers were able to identify more than 100,000 pages with malicious business agreement links set up by GootLoader, with one site having more than 150 pages of content generated by the threat actors.

It’s funny because it’s true:

Accounting industry must take “proactive” approach towards gender equality [AccountancyAge] Findings from the report Top 50 + 50 Accountancy Age report revealed that despite firms leadership remaining predominately male, the percentage dropped from 87 percent to 76 percent in 2020 and that almost half of the people who work in the sector identified as female.

PwC Signs Off Plans to Double Size of its UK Legal Arm [Law.com] Teresa Owusu-Adjei, PwC’s U.K. head of legal, said that the professional services giant’s board has signed off plans that will see a “huge amount of investment” in the firm’s U.K. legal business in the next three to four years. The money will be spent on hiring staff outside of London and investing in new technology to support the legal operation. PwC does not provide figures for its legal revenues, but currently employs around 400 staff in its U.K. legal arm.

Deloitte Launches Unlimited Reality: An Experience and Impact Offering for Virtual Worlds [Cision] Here, have some press release buzzwords: Deloitte’s Unlimited Reality offering helps clients harness next generation strategies, tools, and technologies to create and connect virtual worlds for industrial, workplace, enterprise, and consumer contexts.

Audit chiefs see corporate governance declining [Accounting Today] The American Corporate Governance Index survey, released Tuesday by the Institute of Internal Auditors and the Neel Corporate Governance Center at the University of Tennessee, Knoxville’s Haslam College of Business, found that the number of companies earning A grades in governance dropped to 14% in 2021 from 19% in 2020. The average ACGI score for U.S. companies in 2021 stayed at a B- but dipped to 81 on a 100-point scale, down from 82 in 2020.

Two Local Accounting Firms Merge With Herbein + Company [The Sanatoga Post] No one else beyond their local rag is gonna write this one up soooo… congrats itty-bitties, you made the national news!

Photo by Gilberto Reyes

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As debt talks intensify, Obama opens door to short-term deal to buy more time [WaPo]
The contentious budget talks that have dominated Washington for months intensified Wednesday, prompting President Obama to say he would accept a short-term hike in the debt ceiling if it gave lawmakers time to finalize a comprehensive deal. Obama had pledged to veto any short-term measure, but White House spokesman Jay Carney said Wednesday that the president could accept an extension of “a few days” if it allowed a long-term deficit-reduction and debt-ceiling deal to work its way throu g>My Big Tax Break Looks Like Your Big Spending [Bloomberg]
There is plenty of spending to cut. For instance, we’ve got one government program that hands people money to buy houses that, in most cases, they would buy anyway. They get even more money if they buy a more expensive house. Over the next five years, that program alone will cost almost $500 billion. Another federal agency will spend more than $400 billion to reward people for making money by investing and earning capital gains and dividends rather than by going to work and taking their income in wages. I like investors and I participate in the market, but is this really the sort of activity that requires a $400 billion subsidy?

Fed planning for potential default [Reuters]
The Federal Reserve is actively preparing for the possibility that the United States could default as a deadline for raising the government’s $14.3 trillion borrowing limit looms, a top Fed policymaker said on Wednesday. Charles Plosser, president of the Philadelphia Federal Reserve Bank, said the U.S. central bank has for the past few months been working closely with Treasury, ironing out what to do if the world’s biggest economy runs out of cash on August 2.

Cisco’s 6,500 Job Cuts Could Hurt Push for Offshore Tax Holiday [Bloomberg]
Cisco Systems Inc. (CSCO)’s plan to eliminate about 6,500 jobs worldwide is complicating the corporate lobbying campaign for a tax holiday that would allow multinational companies to return $1 trillion in offshore profits to the U.S. at a low tax rate. The San Jose, California-based company, the world’s largest networking-equipment maker, has been among the most vocal supporters of a repatriation holiday being considered in the U.S. Congress. Cisco chief executive John Chambers has said he wants to return as much as $30 billion in overseas profits to the U.S. The company could increase its headcount by 10 percent, depending on details of a repatriation bill, he said before the job-elimination announcement.

Federal auditors scold IRS for slow notification of security breaches [WaPo]
In a recent report, the Treasury Department Inspector General for Tax Administration reprimanded the Internal Revenue Service for failing to notify taxpayers in a timely way — if at all —when the tax agency inadvertently exposed their personal information. IRS records showed 4,081 inadvertent disclosures of taxpayers’ personal information in fiscal 2009 and fiscal 2010. The IRS sent letters to taxpayers whose privacy was violated 86 days after the fact in 20 percent of the cases auditors examined in a sample of incidents from July 2010 to February 2011.

3 Groups Denied Break By I.R.S. Are Named [NYT]
Three nonprofit advocacy groups that were denied tax exemption by the Internal Revenue Service were all units of Emerge America, an organization devoted to cultivating female political leaders for local, state and federal government. The I.R.S. denied tax exemption to the groups — Emerge Nevada, Emerge Maine and Emerge Massachusetts — because, the agency wrote in denial letters, they were set up specifically to cultivate Democratic candidates. Their Web sites ask for evidence that participants in their training programs are Democrats.

Twitter Poised to Close a Two-Stage $800M Funding, With Half Used to Cash Out Investors and Employees [All Things D]
In a move reminiscent of one done by Facebook in 2009, Twitter is close to completing an $800 million funding deal that will include a second part in which around $400 million of the total will be used to cash out current investors and also employees. According to several sources close to the situation, the complex transaction could be completed within two weeks. Along with basic funding needs, this is largely being done this way to give those with stakes in the San Francisco microblogging company an ability to monetize their privately held common stock and also to do this selling in a more organized — and legal — manner.

Ernst & Young’s Greater Washington Office Announces Leadership Promotions [E&Y]
Four new partners in the DC office. If your office has announced promotions, we want to know.

PwC US Appoints Robert W. McCutcheon as New Industrial Products Leader [PwC]
RWM is the Pittsburgh OMP and will continue in that role but now is also responsible for leading the group that services several industries including “aerospace & defense, chemicals, engineering & construction, industrial manufacturing, metals, transportation & logistics, and forest, paper and packaging.”

Friend-on-friend swindles increase as economy flounders: Prosecutors [NYP]
Don’t forget family members.

The Ernst & Young Las Vegas Office Should Try to Nab This Guy for Their Next Singalong

It’s fair to say that of all the fine accountants that participated in the E&Y video from earlier this week, none of them will be bagging a Grammy any time soon (regardless of what the E&Y bigwigs say).


That being said, there is at least one accountant out there who must decent enough pipes to garner this headline:

The Singing Accountant set to be this year’s Susan Boyle?

Not surprisingly, the young lad is a little timid:

Christopher is an accountant who lacked confidence to follow his singing dream. After years of hiding his talent, his family finally persuaded him to pluck up the courage and audition for the show.

“I’ve come to Britain’s Got Talent to audition today mainly from pressure from my parents, more than anything else. They’ve been telling me for years and years that I need to do something like this.”

If Simon Cowell says this, “I think you have a really, really good voice,” then that’s a pretty good indication that you’ve got a better than average singing voice (unfortch there’s no video at this time).

As opposed to what he might have said to the E&Y LV peeps, which we might be something along the lines of:

A) That’s the worst performance I’ve ever heard.

B) That would make my labrador howl uncontrollably for hours.

C) That explains why your pay was frozen.

D) I know Jim Turley, and when he gets wind of this, you’re all going to be fired.

E) Now I know why Lehman Brothers failed.

Now you go.