Good morning, counterati. It’s Monday again, here is some news for you to start your week.
‘Tis the season to get tax advice from TikTok. p.s. It’s they’re, buddy.
Accountants are too stupid to know about this because after all the schooling they just STOP learning! pic.twitter.com/BuMGHJuKx9
— Jessica Smith, EA 💪🏼, not a CPA (@Taxsavvyjessica) February 9, 2025
Something to chew on as both sides argue about fraud and waste:
My dad was an auditor with The Indiana Department of Revenue. He worked in the Muncie office for a couple of years and then out of the Fort Wayne office for 20 years.
He mostly audited businesses mostly.
He told me many times that most people want to pay their taxes and most…
And on the topic of fraud and waste, I suppose, Tesla’s VP of Finance rejects the assertion that Tesla is committing fraud just because tax rules are easily bested by giant corporations that can afford an army of professionals to best them.
Former Secretary of Labor and Berkeley professor Robert Reich tweeted on February 7:
Tesla earned $2.3 billion in the United States in 2024.
You’d think it paid a lot in taxes, right?
Well it paid precisely $0 in federal income taxes last year.
You want waste and fraud? Look at what some big corporations and the rich are getting away with.
Professor, Respectfully, Tesla’s income taxes are not an example of fraud. Tesla complies with all tax regulations in all of the regions of the world in which we operate. Details about 2024 Income Taxes were disclosed to last month in our 10-K. Notably – we outline our net operating loss carry-forwards, which result from the fact that Tesla has been unprofitable for the significant majority of its 20+ year history. This has been a very, very difficult business to build. Looking at any one recent year in isolation, therefore, will not provide the full picture.
ZDNet brings you 5 ways AI can help with your taxes – and 10 major mistakes to avoid:
In a recent test of ChatGPT’s Deep Research feature, the AI was asked to identify 20 jobs that OpenAI’s new o3 model was likely to replace. As ZDNET’s Sabrina Ortiz reported, “Right in time with tax return season, leading the table was the role of ‘tax preparer’ with a probability of 98% replacement, which ChatGPT deemed as ‘near-certain automation.'”
There is no doubt that retail tax preparation services are using some level of AI to reduce their workload, but while tax preparers may well be replaced by a machine, I’m not convinced that will lead to accurate or reliable tax returns — certainly not yet.
According to an August 2024 report by Boston-based investment banking firm Capstone Partners, there were 70 merger-and-acquisition deals in the accounting services industry through the first half of last year. Activity in the sector peaked post-pandemic in 2023 with 160 deals.
Those numbers will be fun to revisit in a couple years when mid-tier accounting starts to look like grocery store aisles:
What do you do to increase accountant retention at your office?
I believe deep, meaningful connections drive better business outcomes. To strengthen these connections, we have intentionally created team pods that foster relationships from the staff level to partners. Our Los Angeles leadership team recognizes the importance of engagement and has proactively connected with all team members – not just their designated coaches – regardless of project assignments.
Additionally, we established an advisory council composed of professionals from various service lines and experience levels. This group meets to discuss challenges employees face and provides insights and actionable solutions.
One key initiative they introduced was speed networking sessions to enhance cross-service-line connections through specialized discussion topics. They also proposed a reward system for employees who facilitate introductions between colleagues and clients, which not only drives cross-sales but also demonstrates our deep understanding of clients’ businesses and how we can better support their needs.
Elsewhere in LABJ, this guy explains why there’s a dearth of accounting graduates:
Younger people are not drawn to the long hours, lower wages and rigid deadlines of the accounting profession. The repetitive and often tedious tasks involved in preparing a tax return are not enticing for new talent, and we need to make efforts to develop, train and retain the next generation of accountants.
OK but how if none of the things you mention are going to change?
KPMG Canada had multiple deficiencies in five out of 10 audits inspected by the Public Company Accounting Oversight Board in the United States. In a highly detailed inspection report, consisting of 21 pages, the US audit watchdog also flagged 10 instances across three audit engagements in which the firm’s independence may have been impaired.
And independence took a few hits as well:
KPMG Canada self-identified 32 instances across 14 issuers in which the firm or its personnel appeared to have impaired the firm’s independence. In ten audits reviewed and in two other audits, the PCAOB further identified 10 instances across three issuers of potential non-compliance:
“Of these instances, nine related to investments in audit clients and one related to an other financial relationship with an audit client. Four of these financial relationships were instances where a partner in the firm’s chain of command had a financial relationship with an audit client, and three of these financial relationships were instances where a partner in the same office as the engagement partner for an issuer had a financial relationship with that issuer. Three of these instances related to a member of an engagement team.”
[Indiana Society of CPAs CEO Courtney] Kincaid says the program will address the talent pipeline and workforce development issues for the region’s CPA profession and expose Indianapolis-area students from various backgrounds to the profession.
The Indiana CPA Society has worked to address the issue for several years, and Kincaid highlighted their Accounting Careers Awareness Program (ACAP). She says the program targets high school and college students with an in-depth week-long focus on the profession.
FEI Implores FASB, IASB to Slow Down [Compliance Week]
Financial Executives International is concerned that the FASB and IASB have gotten a little too ambitious in their convergence efforts and has written a letter to the Boards’ respective Chairmen that basically says, “Easy, tiger.”
Everyone knows that those knowitalls at the G-20 were insisting the accounting rule mavens to make convergence happen by next summer but FEI is trying to take pragmatic approach to this:
Arnold Hanish, chairman of FEI’s Committee on Corporate Reporting, said in his letter to the two boards the group is concerned about the “unprecedented volume as well as the complexity of proposed standards” that the two boards are developing. The committee fears the vast scope and aggressive timeline for the proposals will not allow adequate analysis of how the rules will work, which will lead to implementation problems and amendments further down the line.
In other words, this isn’t quantum mechanics, but it’s not Fisher Price either. Mr Hanish did his best to remind Bob Herz and Sir David Tweedie just how overambitious this little project is:
Our member companies are extremely concerned with the 10+ Exposure Drafts (EDs) that are in final stages and will be released for public comment through the third quarter of 2010. During any single period in time in its 38-year history, the FASB has had no more than 3 or 4 significant EDs out for public comment.
FEI doesn’t seem convinced that this unprecedented overachieving by Herz and Tweeds is going to result in the “one set of high quality standards.” They would prefer that hte Boards get this right the first time so they don’t have to slap the proverbial duct tape all over the efforts later.
Cabbies, Accountants Look to Chip-Fat Fuel on Cost, Environment [Bloomberg]
PricewaterhouseCoopers’ London office is trying to do its best for the environment by using local chip-fat converted into biodiesel to supplement its energy needs:
PwC is seeking local sources for 45,000 liters of biodiesel to meet one quarter of its monthly office fuel needs, said Jon Barnes, head of building and facilities services at the firm.
“I’m trying to locally source used chip fat from restaurants,” he said. “It’s a pretty pointless exercise of using biofuel if it’s been all round the world on a ship.”
Sounds like a bang-up idea but P. Dubs is always looking for an angle, “Having a renewable source for some of PwC’s office’s energy needs could help the company sell its services to clients wanting to do the same.”
House Holds Hearing Today on Tax and Internet Gambling [TaxProf Blog]
The House Ways & Means Committee is holding a hearing today to kick around the possibility of legalizing Internet gambling here in the US of A (and taxing it, of course). It kicks off at 9:30 am ET and with any luck, you’ll be legally losing your mortgage payments for the 2010 football season.
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