Hey. I’ve gathered some news for you. We’ll start with some municipal news, something I’ve been keeping my eye on for years now. It hasn’t blown up like I thought it would by now but there’s definitely some rot there.
For example, this town in Maine, just one of many late on their audits:
Municipal officials are working to straighten out the town’s finances as they try to get Skowhegan up to date on three years of pending audits.
Town Manager Nicholas Nadeau said there is no indication anything is wrong with the town’s books. But he said Skowhegan — like many Maine towns, counties and school districts — has fallen behind on its required annual financial audits, in large part due to the lack of certified public accountants who can do that work.
Skowhegan’s last audit was for the fiscal year ending June 2022, according to a database the Office of the State Auditor maintains. That audit was completed in May 2023.
A school district in Texas discovered a naughty employee hiding in its ranks and someone from their audit firm explained a bit about how this employee hid their tracks in a recent board meeting:
A former Fabens Independent School District employee was found to have used the district’s credit card to give themselves about $41,000 in cash advances over several months, which they spent at a local casino.
The former employee, who has not been named by the district, allegedly rerouted the credit card statement to their district email and doctored it to remove records of the charges, said Nathan White, a presenter from the governmental audit firm Singleton Clark, during a Jan. 21 board meeting.
White said the charges were made between September 2024 and June 2025.
No one likes getting audited, this is why it’s important anyway. According to the school district they discovered it before the audit but point stands.
Meanwhile, the city of Stockton in California is getting an audit going after the vice mayor brought up concerns about vacant financial positions in city government. This has been an issue affecting a lot of municipalities in the last few years, made worse by many municipalities struggling to get their audits done due to staff shortages on their end and a shortage of audit firms ready/willing to do the work:
In November 2025, Vice Mayor Jason Lee, who chairs the City Council’s Audit Committee, sent a formal letter to the State Controller’s Office requesting a comprehensive audit. Lee cited serious risks to fiscal stability, including prolonged vacancies in key financial roles such as chief financial officer, procurement director, auditor and budget officer.
He described the situation as “a bank with the back door left open and no one watching it,” pointing to alleged internal control breakdowns, unauthorized commitments of public funds, improper procurement practices, unapproved budget modifications, and hiring practices that deviated from established policies. There have also been established payroll errors.
The California State Controller’s office got to work checking things out on Thursday.
Is private equity’s voracious hunger for professional services calming down? Financial Times says maybe this recent failed deal could show that “the deal frenzy that has gripped professional services could be reaching its limits.” Or maybe no one wanted to pay £1 billion for a firm that sounds like a monoclonal antibody drug to treat Crohn’s, idk.
A sale of UK accounting firm Xeinadin has collapsed after its private equity owners failed to get their desired £1bn-plus price tag, signalling that investor appetite in professional services may be starting to wane.
UK buyout group Exponent, which invested in the business four years ago, failed to get bids for the top 20 accounting firm Xeinadin that matched its expected valuation, according to people familiar with the matter.
When we last wrote about Xeinadin, also in a weekly news brief, we found an EBITDA of about £60 million ($82 million USD) and a roll-up firm that was only created in 2019. Those details may matter if we’re talking about the bigger picture and private equity interest in professional services.
Those fancy new AI roll-up firms hoping to unload in a couple years should pay attention to what just happened here.
TIGTA found some taxpayers are owed pandemic relief, reports CNBC:
The IRS owes some taxpayers refunds after they were mistakenly left out of a pandemic-era IRS relief program, according to a new watchdog audit.
More than 2,100 taxpayers have had their tax accounts corrected after auditors found they were collectively eligible for an estimated $463,000, according to a recently released report from the Treasury Inspector General for Tax Administration.
TIGTA’s audit found that 2,138 taxpayers, representing 2,248 tax accounts, should have been eligible for relief from so-called failure-to-pay penalties related to unpaid taxes for 2020 and 2021. The average penalty refund owed per account was $206, the watchdog said, although the exact amount depended on the specifics of the taxpayer’s situation.
TIGTA’s report in PDF here.
Those of you still paying off your student loans will want to read up on tax changes that could affect you. Capitol News Illinois writes:
For the first time in five years, certain forms of student loan forgiveness will be taxable following a change in federal tax policy this year.
This comes after a provision of the American Rescue Plan Act expired Dec. 31. That measure, signed into law in 2021 by former President Joe Biden, temporarily excluded student loan debt from federal income taxes.
And those tax implications could extend to Illinois state taxes as well unless lawmakers act.
President Donald Trump’s “One Big Beautiful Bill Act,” enacted last summer, did not make the student loan tax forgiveness provision permanent. As a result, student loans that are canceled or partially forgiven in 2026 and beyond will see taxes owed on those forgiven amounts, advocates said. These taxes could amount to as much as $10,000, depending on the borrower’s income.
MSN does this weird thing where they pull old articles and make it seem like it’s new, it’s quite annoying (always check the date when you read an MSN article. AOL does it too but who the hell gets their news from AOL). However, this morning it threw this article from a few months ago at me and we didn’t cover it when it came out so let’s do that now, shall we?
Accountants expect 20% staff cuts in next five years
A recent report by the Indiana CPA Society (INCPAS) reveals that 52% of accountants expect their firms to reduce headcount by 20% over the next five years.
The study, conducted by CPA Crossings and titled “Transforming Your Firm’s Business Model: Workforce Transformation and Talent Management Strategies,” surveyed 205 full-time professionals across public accounting firms in 31 US states, representing roles from staff accountant to partner.
The report highlights a significant shift in workforce expectations, with most respondents anticipating a reduced need for entry-level employees in the future.
This change is driven by technological advancements and a talent shortage, which are disrupting traditional business models in public accounting.
The conventional pyramid-shaped practice structure, reliant on a large pool of entry-level staff, is becoming unsustainable.
According to the findings, firms will need to prioritise hiring staff with technology and business skills who can start at an experienced level and deliver greater value to clients more quickly.
They done broke the pyramid, y’all!
From the executive summary of the report [PDF]:
This dramatic reduction, driven by technological advances and a talent crunch, will upend the pyramid practice structure that accounting firms have successfully leveraged for a century to sustain growth and profitability. An important driver to success in the future will be retaining the best performers within accounting firms. The pyramid practice structure was not designed for talent retention. In fact, it functions in an opposite way: filtering talent out. What other options are presenting themselves to firms that are willing to change?
“Talent crunch.” Stop it. They go on to point to companies in manufacturing, health care, technology as success stories for this new paradigm. You know, industries that have been offshored and private equitized to death.
We’ve been asking what the plan is for training associates now that all their work has been sent off to India, guess we have our answer. No1curr! Why did they even bother with that talent shortage task force?
Did you hear seasonal hiring is out? The reasons given in this INSIDE Public Accounting article about it are solvable problems, like hiring in October and having a training regimen to teach your hired hand how things work before tax season.
Seasonal hiring was effective in an era when tax returns were simpler, workflows were slower, and review expectations were less rigorous.
In today’s environment, it introduces several structural weaknesses.
Hiring occurs after the problem is already visible
Firms often realize they are short-staffed in February or March. At that point, experienced seasonal talent is scarce, and there is limited time to train new hires to firm standards.
Temporary staff increase review effort
Seasonal preparers frequently lack deep familiarity with:
- firm-specific documentation standards
- reviewer expectations
- escalation protocols
- quality thresholds
This leads to additional clarification cycles, rework, and deeper review-offsetting the intended capacity gains.
Scrolling down, we get to the point:
Offshore talent is becoming infrastructure, not experimentation
Offshore tax professionals are no longer viewed as a short-term fix by many firms.
When deployed correctly, they function as:
- embedded team members
- consistent contributors across seasons
- specialists aligned to defined workflow stages
- The difference lies in structure.
When offshore professionals are treated as interchangeable labor, results vary. When they are deployed as dedicated seats with defined responsibility, they become part of the firm’s operational backbone.
Yeah so, the same thing you could have done with onshore seasonal talent but they cost more.
This is all beginning to feel like a bad infomercial. Firms create a problem (“the talent shortage”) by keeping salaries low, get superdramatic about it, in comes offshoring to solve it.
I think that’s enough for today. As always, my inbox is open. Email or text with tips, links, or field reports about what’s happening at your firm. Have a great week!