Yo. Got a few things for you this morning.
In this news brief
That’s Some Real Dirty Dirt
KPMG is dealing with some new but old allegations that have emerged as the firm does the old song and dance for parliament:
Former KPMG partner Philip Henry allegedly treated “female members of staff and clients inappropriately”, including making “unwanted sexual advances” during his tenure, according to allegations from a whistleblower detailed in a letter tabled in federal parliament.
Philip Henry worked at the firm until his publicly reported departure in 2004 and is also accused in the document of allegedly receiving “secret commissions” that were paid “in cash” by a client after he devised tax schemes for them.
In other instances, the document alleges, he received personal gifts from some clients instead of being paid in fees, or to reduce the fees.
The allegations have surfaced as part of a parliamentary inquiry looking at the KPMG audit leaks scandal engulfing the firm.
AFR also covered these allegations here where they mention Henry led the middle market practice.
Well, There’s the Reputational Damage Too Ya Know
Speaking of dirt, alleged or otherwise, the Wirecard whistleblower had something to say to Accounting Times about the nature of the audit profession:
Speaking to Accounting Times in the wake of the KPMG audit scandal and its treatment of the whistleblower who alleged misconduct in the audit department, Pav Gill said the audit profession is riddled with issues “as a whole”.
Specifically, he voiced concerns about the lack of sanctions or repercussions for misconduct or wrongdoing in general, whether it is a failed audit or mishandling of internal whistleblowing.
“I don’t see repercussions that are proportionate to the damage,” he said.
“Even if you look at Wirecard, where EY Germany was the auditor, some auditors surrendered their licenses, and the proceedings against them ended. EY itself and five individual auditors were sanctioned, but were the consequences proportionate to the scale of the failure? If you can prove bad faith or serious misconduct, there must be real accountability.”
Chilly Days For Consulting Ahead
Looks like consulting isn’t going to heat up any time soon. Financial Times put out a long read explaining the situation:
Consultants are on a collision course with their clients over the cost of giant IT projects, as companies look to AI to cut spending on external advisers.
In FT interviews, large and small businesses around the world said they are demanding reduced fees or moving work in-house, aided by new AI tools and software that requires less integration.
“Consulting resources will be needed in very different numbers and also with different skills,” said Jochen Kamp, who is leading an IT overhaul at German drugmaker Bayer. “The traditional consultant as we know them today will certainly have to change. Fewer and fewer of them will be needed.”
EY Thinks WFH Doesn’t Work For Consulting
In related news, EY wants its baby consultants in the office:
Executives at some of the UK’s largest consulting firms said AI had made interpersonal skills increasingly valuable — competencies they argued must be developed in-office.
“This change we’ve seen in the last few years where people have set up their lives to be . . . at home a lot is just not the route to success in the world of AI,” said Sayeh Ghanbari, UK head of consulting at Big Four firm EY. “We’re facing a position where we’re going to have to reduce flexibility, but in order to help the human skills.”
FBI Raids Weren’t Included in the Original Engagement Letter
Macias Gini and O’Connell LLP has an interesting client out in California:
While details remain sparse in the wake of a high-profile FBI raid on the Contra Costa County Assessor’s Office and the homes of its two top officials earlier this year, the independent accounting firm tasked with evaluating that office’s financial compliance is set to be busier than ever following a contract amendment to fund an expanded audit scope and other analysis that was approved by the Board of Supervisors last week.
An amendment increasing the payment limit by $250,000 compared with the existing contract for financial auditing services was approved unanimously by the board as part of the consent calendar at its Aug. 25 meeting.
“Since the execution of the original audit engagement letter, MGO has become aware of increased audit risk in the County, including publicly reported information regarding an ongoing federal investigation involving a County elected official, as well as additional information concerning functions within that office that may be relevant to an assessment of audit risk,” County Administrator Monica Nino wrote in a staff report for last Tuesday’s board agenda.
ABC7 wrote about the raid back in June and quoted the exiting assessor as calling it “trauma and drama” and a “fishing expedition.”
Godspeed, MGO.
Alright, off to work for you. Email or text if you have a tip or story for us. Bye!
