The Big Four Balancing Act
Francine McKenna writes on a new study from the University of Chicago: "In their new research paper, 'Competition in the Audit Market: Policy Implications,' Chicago Booth Professors Gerakos and Syverson say an unexpected market exit of any of the Big Four audit firms would result in substantial losses in client companies’ expected 'consumer surplus.' Consumer surplus is defined as companies’ value of purchased audit services in excess of the fees paid for them—that is, the net benefit derived from the audit services. Gerakos and Syverson estimate that, conservatively, client companies’ consumer surplus, the total dollar amount client firms would have to receive in order to be indifferent to losing the ability to hire the exiting auditor, would be between $1.2–1.8 billion per year depending on which of the four auditors exits the market."
Ernst & Young to ramp up Wichita operations
FYI: "Ginger Farney, who runs the London-based firm’s Wichita office, tells [Wichita Business Journal] the firm is looking to hire three or four full-time employees and four or five interns over the next six months.
Tax increases divide House Democrats
A sizable bloc of the 16 Democrats on the House Ways and Means Committee is contemplating agreeing to Republican demands that any tax overhaul not include tax increases, bucking their party on what has become a signature issue. “I’m not ruling anything out," said Rep. Earl Blumenauer (D-Ore.). “It depends." Massachusetts Rep. Richard Neal, another Ways and Means Democrat, said “I want to wait and see." “It’s a long way from me being in, but we’re going to keep the conversation going," he said.
Looking for Brotherly Love for tax reform on July 29 [DMWT]
Corsicana bakery accountant accused of stealing $16 million
The Collin Street Bakery in Corsicana, world famous for its fruitcakes and cookies, may now be known for something it's not so proud of. Wednesday morning, FBI agents raided the home of their corporate accountant, who is accused of helping himself to more than $16 million of the bakery's financial treats. Sandy Jenkins and his wife, Kay, enjoyed the good life. Luxury travel, exotic vacations, a driveway full of expensive cars. Jim Polk noticed. He lives across the street. "And I'm looking at cars that are $100,000 to $200,000 and I'm thinking, 'My God, he must have hit the lottery'," Polk said. "A schmuck working for Collin Street Bakery doesn't make that kind of money."
IAASB Proposes Standards to Fundamentally Transform the Auditor's Report [AWEB]
The exposure draft includes a new proposed ISA titled Communicating Key Audit Matters in the Independent Auditor's Report. This proposed ISA directs auditors of financial statements of listed entities to communicate in their report those matters that, in the auditor's professional judgment, were of most significance in the audit of the financial statements. "The intended outcome of this proposal is more informative audit reports, with information about the audit of the financial statements that is unique and more specific to the entity that has been audited," noted James Gunn, IAASB technical director. Among other enhancements, the IAASB is also proposing requirements for auditors to include specific statements about going concern in their reports; to make an explicit statement about the auditor's independence from the audited entity; and, for listed entities, to disclose the name of the engagement partner in the auditor's report.
Microsoft Excel: How to Automate Text File Links [AWEB]
News you can use.
Kickstarter Project Canceled After Dude Spends All the Money [VW]
It was for a board game, so this sounds about right.