Ernst & Young: Accountancy giant advises Google, Apple, Facebook and Amazon on tax affairs [Independent]
Most people who keep an eye on accounting know that EY is the preferred firm for some of the most visible Silicon Valley companies. And since these companies are becoming as well known for global tax avoidance as they are internety things, EY can expect a more scrutiny:
The work is hugely lucrative: publicly available accounts show it billed [Google, Apple, Facebook and Amazon] some $245m (£171m) in recent years. Of that, $34.5m was for advice on tax affairs, with the rest for auditing the accounts – an activity that includes checking the company’s statements to the taxman are accurate.
At Google, EY has been billing between $2m and $5.5m for tax advice every year since 2011. At Facebook, which is resisting attempts by HMRC to reclaim back taxes, it was paid between $3.2m and $5.3m in the past three years – the only periods for which there is public documentation.
Last year’s bill to Apple was $1.7m for tax advice.
Right now, EY is especially feeling the heat in the UK, where the firm was criticized by a parliamentary committee for, among other things "a chain of audit failures." But what's most amusing about this is the committee's appeal to altruism:
"We expect the big accountancy firms to recognise that the public mood on tax avoidance has changed. They should provide responsible advice to ensure that corporate arrangements reflect the substance of transactions in the UK and enable their clients to be more transparent about where they make profits and pay tax."
They should probably make some tea while they wait.
AICPA Pushes for Auditing and Assurance Changes [AT]
I guess this speech that AICPA president, CEO and Super Bowl 50 halftime entertainment Barry Melancon gave was a real doozy. As it relates to the opiners out there, BM wants to see a little more effort around the use of technology and employee benefit plan audits. And they plan to ensure you're all keeping up by improving the peer review process:
Part of the plan involves improving the peer review process, and the AICPA has been working with the state CPA societies on that initiative. “We need to make some specific changes in peer review as it relates to firms that take on new types of engagements that are very specialized,” said Melancon. “The reputation of the profession is based on the fact that we do quality work, and we have to focus on where there are particular deficiencies in that area. We also have a plan that we are working on that would materially change peer review as it relates to a technology-based approach. We’re actually piloting that beginning in the fall of 2016 with different-sized firms that volunteered for that. They’ll work in 2016 and 2017 on that concept. Instead of reporting out, it’s going to be used internally at first so we can learn from that and see how it works. What we envision is really a connection with the technology and the software that firms use to manage their engagements, with audit indicators on quality and being able to spin off earlier indications of problems before a firm even issues a report.”
Instead of looking at the results afterward, as is standard with the current peer review process, the concept is to use technology to affect the results before they go out the door. “Then we would be delivering the quality that is expected of the profession,” said Melancon. “The negative of that is people will feel it is a bit intrusive, so we’ve got to find the right balance.”
People have been complaining about the peer review process for years, so it's a little odd that they're expecting some resistance because the technology will be "intrusive." Maybe I don't have the refined palate when it comes to auditing, but I have my doubts that your audit secret sauce is all that special. Or secret for that matter.
Toshiba picks PwC as auditor after accounting scandal [Reuters]
Someone had to pick them up, didn't they? And from what I've heard about PwC's Japan practice, they could use the work.
In other news:
- FTC Sues DeVry Education, Alleging Deceptive Ads
- 5 Ex-Brokers Cleared in London Libor Trial
- Uber still doesn't have a CFO.
- Chill states.
- Man fur.
- David Bowie giraffe.