In the UK and Europe, ending long-term relationships with auditors is becoming quite fashionable for asset managers:
Schroders is to begin searching for a new auditor, three years after Europe’s second-largest listed asset manager was forced to backtrack on an attempt to replace PwC as its accounting firm.
The London-based investment company’s decision to end its 57-year relationship with PwC comes after a number of large investors raised concerns about the ability of audit firms to deliver independent advice when they have worked for the same company for decades.
Another manager, Aberdeen Asset Management ended a 32-year relationship with KPMG and yet another, Jupiter "was criticised for reappointing PwC, its auditor of 13 years." The thinking goes that having the same eyes (i.e. firm) looking at your books for decade after decade is bad for independence, audit quality, investor confidence, etc. while fresh eyes are good for independence, audit quality, investor confidence, etc.
Here in the US, the attitude is the more or less the exact opposite. Audit firms enjoy very lengthy tenures with clients and argue that the lengthy tenure makes the audit better, keeps costs low, etc. despite the optics. Like most things audit-related, technology has the potential to turn the whole thing on its head, especially if a firm starts designing its audits to detect fraud and/or throwing around assurances beyond "reasonable."
Wait Times Are Down, But IRS Still Faces Serious Challenges [WSJ]
In 2015, wait times for the calling IRS were 21 minutes, on average. When you're keeping taxpayers on hold for that long, I suppose you'd try anything to temper the anger on the other end of the line:
Christine Giovetti, an accountant in Catonsville, Md., has heard more than her share of “One to One,” the IRS’s saccharine hold music.
“You get tired of it, no matter how nice it is,” she said.
The good news for taxpayers during this year’s tax-filing season is that she and others are hearing fewer repeats from the royalty-free song collection called “Fresh Optimism.”
In 2016, taxpayers endure "Fresh Optimism" for only 9 minutes. That's much better! But there's plenty to be less sunny about including identity theft and fewer audits of large companies. The IRS says they need more money, GOP congressional members are holding a grudge against IRS commissioner John Koskinen, and it's an election year:
“The IRS doesn’t have a lot of natural defenders,” said Leandra Lederman, a tax law professor at Indiana University. “There’s not that many people who are going to stand up and say, ‘Yeah, tax collection!’ And you can score pretty easy political points by saying the IRS is too large, bashing the IRS, saying the IRS is incompetent.”
The irony being that the people who ultimately suffer are the voters. They're probably going to need a heavy dose of "Fresh Optimism" until 2017 when Koskinen's term ends.
Stephanie and Justin Shults
Last week, we mentioned the couple of expat accountants who went missing in Brussels after the terrorist attacks there. Sadly, they've been identified as victims:
After marrying in 2014, the couple, both accountants who met at Vanderbilt University in 2011, found jobs in Brussels. Nearly every weekend they set out across the Continent — running with the bulls in Pamplona, Spain, visiting an ice hotel in Sweden, walking along the canals in Amsterdam, dining in the shadow of the Eiffel Tower.
In the same Brussels airport they had happily visited many times before, the Shultses were killed on Tuesday, the victims of suicide bombers. Confirmation of their deaths came on Saturday.
Previously, on Going Concern…
I spoke LIVE with Greg Kyte and Jason Blumer about Results Only Work Environments (you can watch the replay). And from this weekend on Open Items: Tax in F100 vs Regional Public Accounting Firm.
In other news:
- A Manager’s Job Is Making Sure Employees Have a Life Outside Work
- "It’s Batman versus Superman, versus road repairs, income-tax relief or any number of other priorities for Michigan families and businesses.”
- Islamic State Finance Chief Killed in U.S. Attack
- Joe Kristan goes over the importance of documentation for donations to Goodwill, Salvation Army, etc.
- Rent control at the Plaza Hotel.