The big story over the weekend, and one I’ll probably be writing a biased editorial article on later because I unapologetically hold the opinion that the PCAOB is 99% tedious paper-pushing, comes from Financial Times:
Republican lawmakers are planning to shut down the US audit regulator, which was founded in the wake of the Enron scandal more than two decades ago, as part of a reform package designed to deliver Donald Trump’s deregulatory agenda.
The proposal to eliminate the independent Public Company Accounting Oversight Board was published late on Friday by the leadership of the House Committee on Financial Services, for inclusion in the giant tax and spending bill being considered by Congress.
Oh. There’s a whole bill. Well I better read it before I say more. We don’t base whole-ass opinions on a headline and a few lines of text over here.
I stand by what I said about the PCAOB.
A CPA Journal article asks “Did the CPA Evolution Leave Educators Behind?” Authors Walied Keshk, PhD, CPA and Edward J. Lynch, PhD, CPA did a little research on the ground to answer the question:
During the 2024 spring semester, the authors surveyed 97 accounting faculty members from 45 different universities across 21 states. Among other things, the survey inquired about respondents’ readiness to adapt their courses and teaching methods to the new CPA exam requirements. Surprisingly, roughly one-third of the faculty members responded that they do not feel fully prepared. Faculty members who believe they are not prepared (as well as some who do believe they are prepared) responded that they need additional resources to help them prepare their students for the new CPA exam and careers in public accounting. In addition to the survey results, this article reports the additional resources suggested by faculty to fully adapt their courses and teaching methods to the new CPA exam, including how they believe CPA firms can assist.
An interesting bit that by no means reflects the majority view of respondents:
Fourteen faculty members (including 0 adjuncts) suggested that public accounting firms share training materials and ideas for class activities and assignments. Specifically, faculty members would like firms to share materials related to the topics that are now emphasized in the new CPA exam, such as SOC reports, data analytics, and technology; as well as the skills being tested, such as critical thinking, analytical, and evaluation skills. Again, numerous accounting firms have already been sharing materials with educators for many years, but this survey indicates that faculty would like to see materials focused on topics now emphasized on the new CPA exam.
In addition, 13 faculty members (including 1 adjunct) suggested that accounting and auditing professionals work more closely with faculty members to update the accounting curriculum. This could be implemented in numerous ways. For example, many accounting departments have local accounting firm partners on their advisory boards and they meet regularly to discuss curriculum changes, scholarships, and student recruitment. Furthermore, accounting and auditing professionals can participate with faculty members in designing relevant class projects, attending student presentations, and evaluating students’ written work.
Reminder to academics: you all hold the keys to firms’ precious pipelines. Make ’em work for it!
Deloitte surveyed 200 CFOs across five sectors who work at organizations with at least $1 billion in revenue and found employee engagement (50%) and lack of skilled talent (45%) are among their biggest workforce challenges.
The situation could intensify as increasing numbers of experienced finance employees reach retirement age and the number of college graduates with accounting degrees continues to decline. When we asked CFOs to name their biggest worries related to pipeline concerns about accountants (figure 1), increased workload for existing employees was the top response (44%). Loss of credibility with institutional and private investors was the second most cited concern (42%) about pipeline issues for accountants. Erosion of board confidence in finance (41%) was third on the list.
An employee stole more than $100,000 from a Salt Lake County liquor store over a 3½-year period, according to a report from the state auditor that the Utah liquor commission’s chair described as “scathing.”
The audit’s findings included the revelation that a liquor store employee stole $112,809 from an unidentified liquor store in Salt Lake County between January 2021 and June 2024.
At the New York Stock Exchange, Diasio outlined how EY teams are leading the charge in artificial intelligence (AI) transformation. “Before we advise our clients, we needed to introspect and transform our own business practices,” he stated. This client-first approach has led to the creation of a comprehensive playbook designed to guide organizations through their AI initiatives, so they are equipped to navigate the evolving landscape.
One of the standout revelations from this journey was the essential role of executive engagement. Diasio noted, “It took significant involvement from our executives to not only understand AI but to be prepared to implement it effectively.” This proactive engagement is vital for organizations aiming to leverage AI’s potential while addressing its inherent challenges.
He says 2025 is the year “we will see AI systems that can take actions on behalf of users.”
About a week after Jackson city leaders said it could be time to bring on a new CPA firm, the city’s current CPA says the problem is not with him, but this time with JXN Water.
On Thursday, the City Council’s Finance Committee heard from Scott Hodges, a partner with Tann, Brown & Russ, to discuss the 2023 Comprehensive Annual Financial Report.
He told members that he still has not gotten the data from JXN Water to complete the audit.
A key US banking regulator unveiled settlements with two former Wells Fargo & Co. auditors who were alleged to have ties to the bank’s systemic sales-practice misconduct, according to a statement Friday.
The orders resolve actions the Office of the Comptroller of the Currency initiated against David Julian, former chief auditor, and Paul McLinko, former executive audit director. The regulator assessed a $100,000 civil money penalty against Julian and a $50,000 civil money penalty against McLinko.
In 2020, Wells Fargo agreed to pay a $3 billion fine related to its 2002-2016 scheme to artificially inflate sales numbers by opening millions of accounts without customers’ knowledge or consent.
OK I think we’re done here. As always, please email or text if you have a tip, see an interesting story, have a topic you think we urgently need to discuss, or just want to complain. Anonymity is assured.
Be well, go out and touch some grass, and have a great week!
• Dodd Seeks U.S. Inquiry Into Lehman’s Accounting [DealBook]
Late on Friday, Senator Chris Dodd (D-CT) sent a letter to Attorney General Eric Holder requesting that the Department of Justice investigate Lehman Brothers’ “accounting manipulation” that contributed to its bankruptcy. According to his letter, Dodd also wants the DOJ to investigate “other companies that may have engaged in similar accounting manipulation with a view to prosecution of employees or agents who contributed to any violations of the law.”
With the exception of Lehman, Dodd did not name any companies specifically. He wrote, “We must work tirelessly to reduce the incidence of financial fraud in order to restore trust and confidence in the financial markets. A task force investigation and taking appropriate Federal actions in these matters will contribute to these goals.”
• An Ernst & Young Response: Dear Audit Committee Member… [Re: The Auditors]
Ernst & Young is on the offensive, telling everyone who will listen their position on the results of the Bankruptcy Examiner’s report. The ubiquitous Enron and Andersen comparisons in the MSM — while cliché and misleading — have motivated E&Y to reach to audit committee members that ulitmately decide whether E&Y will be providing services to their companies. Francine McKenna posted the letter noting, “I guess they know where their bread is buttered: With the guys who hire and fire them in the Fortune 500.”
The firm addresses everything from the actual accounting, “The media reports that these were ‘sham transactions’ designed to off-load Lehman’s ‘bad assets’ are inaccurate,” to whistleblower Matthew Lee’s letter, “When we learned of the letter, our lead partner promptly called the Audit Committee Chair; we also insisted that Lehman’s management inform the Securities & Exchange Commission and the Federal Reserve Bank of the letter.”
Naturally, the firm plans to defend themselves vigorously stating, “EY is confident we will prevail should any of the potential claims identified against us be pursued.”
• Obama Hails Vote on Health Care as Answering ‘the Call of History’ [NYT]
Last night, the Senate bill was approved by the House, 219-212, and it could be headed back to the Senate for final approval as early as this week. In a shocker, Democrat and GOP views on the bill don’t seem to be converging as one Dem legislator described it as “the Civil Rights Act of the 21st century,” while a GOP member described the bill as, “a fiscal Frankenstein.”
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