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Accounting News Roundup: KPMG South Africa, Intuit Loans, Paid-to-Click Scams | 11.08.17

Posted on by Caleb Newquist
accounting news kpmg south africa

KPMG South Africa

I linked to this yesterday, but it’s worth discussing this Financial Times article that notes an important development in KPMG’s South Africa snafu:

Barclays Africa has […] put KPMG’s role as its auditor under review in response to the Gupta controversy, pending the outcome of a regulatory investigation. However, one person briefed on the matter said the UK bank had decided to stick with KPMG as its auditor.

Munich Re, the German reinsurer, also confirmed it would continue to use KPMG to audit its global operations, despite deciding to drop the Big Four accountancy group in South Africa last month.

Despite its ludicrous corruption, if KPMG South Africa were to implode, there was little risk to the global firm. The one vulnerable area, however, was the multinational clients like Barclays and Munich Re. If they dropped KPMG not just in South Africa, but worldwide, those would be devastating losses, and those companies would have to experience the shitshow that is transitioning to another Big 4 audit firm.

I’m sure the global brass at KPMG are relieved, but there are lots of people who want a different result. “In my view there is more than enough evidence that unethical conduct is not confined to KPMG South Africa,” said one consultant. KPMG “has a real ‘corporate culture’ problem,” says another guy, who added, “I would not deal with them anywhere.” Not too good, KPMG!

So, yeah, the firm is dodging a bullet here, even if it wasn’t a mortal one. Not for lack of trying though; if this mess had happened in Germany or the U.K., things might’ve turned out differently.

Put your back Intuit

Sure, why not:

Financial software firm Intuit is offering loans directly to businesses with a lending product called QuickBooks Capital.

The company, which makes tax-preparation and accounting software, said Tuesday it would enable firms to use its bookkeeping software to access up to $35,000 in credit, with a term between three and six months.

“As the largest small business accounting platform with approximately 2.4 million customers, the QuickBooks platform provides the most complete set of small business data available in the market,” the head of QuickBooks Capital said.

I think it’s a good sign that an accounting software company has run out of ideas for its products when it gets into the lending business. When it comes to auxiliary activities, Intuit should stick to what it knows best, which is lobbying against return-free filing.

The internet

There are lots of ads around the internet that make you go, “That’s probably a scam.” But it’s interesting to learn that there are actual (alleged!) scams out there that encourage people to click on the suspected scams. Here’s an SEC press release that explains:

The Securities and Exchange Commission is warning investors to beware online “paid-to-click” scams that promise an easy payday by merely purchasing a membership or an advertising product up front and then clicking on a certain number of online ads each day.

The SEC’s investor alert explains that these online advertising programs may have little to no revenues besides membership fees or sales of “ad packs” and may be nothing more than a Ponzi scheme.  The SEC filed an enforcement case that was unsealed last week in federal court in Florida, alleging that roughly 99 percent of the purported “profits” paid to earlier investors came directly from the buy-in fees collected from newer investors.  Meanwhile, according to the SEC’s complaint, the alleged perpetrator siphoned several million dollars out of investor funds to purchase a luxury home, automobiles, and private plane charters while also using the money to fund his other businesses.

“Be skeptical if you are offered high returns for buying advertising products or clicking on online ads,” said Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy. It’s weird that this particular warning has to be announced to the public, but I suppose the lure of high returns for clicking around the internet is too tempting for some. The SEC alleges that this particular case raised $38 million from at least 150,000 investors.

Previously, on Going Concern…

In Open Items, there have been lots of threads about recruiting season. Someone is wondering if they should ask why they didn’t get a full-time offer. Someone else is trying to decide between two offers. And yet another user is worried about the timing of communication from a firm recruiter.

In other news:

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See something we missed? Have a correction, comment, or complaint? Email us at editor@goingconcern.com.

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Ray died unexpectedly yesterday. He was on vacation in Orlando with his nine-year-old grandson doing what he loved—visiting Disney World.

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