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October 1, 2023

Accounting News Roundup: KPMG and Wells Fargo; Pass-through Tax Rates | 04.26.17


A different giant rabbit.

KPMG and Wells Fargo

As if KPMG hasn’t had a rough enough month already, that Wells Fargo stink is not washing off:

Two U.S. Senate Democrats are asking a U.S. audit watchdog to review whether KPMG failed to disclose or prevent fraud when it audited Wells Fargo’s books during the time period that the bank’s sales force was opening two million unauthorized accounts.

In an April 25 letter to Public Company Accounting Oversight Board Chairman James Doty, Massachusetts Senators Elizabeth Warren and Edward Markey said they were concerned that the accounting company issued clean audit reports for Wells Fargo & Co from 2011 through 2015 even though KPMG became aware of the [unauthorized account] fraud during at least some of that time.

KPMG responded to Senator Warren’s letter last fall that the fake accounts “did not itself have an impact” on the bank’s financial statements because, of course, that’s what they said. However, as we’ve all seen, lots of people — especially shareholders! — haven’t gotten over Wells Fargo’s  creation of millions of phony accounts. It seems like KPMG will have to keep riding this one out.

How’s tax reform coming along?

Lots of words getting written on the subject of tax reform, mostly in vain, as most of the ideas are just that: ideas. Still, it seems that if you make a living in the tax prep and planning world, you’ve probably put a lot of clients into pass-through entities and that seems to be where the focus is right now:

President Donald Trump’s plan to cut the tax rate to 15% for so-called pass-through businesses would be a radical change to the tax code.

The measure would apply to partnerships, S corporations, and limited liability companies that don’t have to pay corporate-level taxes and instead “pass through” to owners a proportional share of income, losses or expenses that are now taxed at a top rate of 39.6%.

These businesses are global law or accounting firms, hedge funds, and private-equity funds in addition to small real-estate firms, car dealers, and manufacturers.

Yep, there’s a lot to like here if you are a tax partner in an accounting firm or any partner in an accounting firm for that matter. Or a real estate mogul who become president! Anyway, the plan is supposed to be announced today. Get excited.

Elsewhere: A 15-Percent Corporate Tax Rate Could Create An Enormous Tax Shelter

Previously, on Going Concern…

Adrienne Gonzalez shared some ideas for keeping yourself occupied now that busy season is over. I wrote about an audit quality metric that’s been hiding in plain sight. In Open Items, someone is asking about EY’s national training.

In other news:

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