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Accounting News Roundup: More on the New EY; Big 4 Has Barclays in Their Corner; Tax Reformers Getting Ahead of Themselves | 07.01.13

EY Bets The Farm On Advisory With Vision 2020: A Guest Post From Mark O’Connor [re:The Auditors]
After a brief intro jumping off of our post from last week, Francine introduces Monadnock Research. Here's a taste of what he writes: "[V]irtually all of EY’s extraordinary growth would need to come from advisory. EY had around $13.5 billion in non-assurance revenues in fiscal 2012, so it would need to grow that by around 266% to reach that goal. That would require an 11. 5% compound annual growth rate (CAGR) coming out of our “great global recession”, assuming that the assurance revenues independently grow at a 3.5% annual rate. EY’s 2012 advisory non-assurance non-tax growth was close to 13%, so in isolation an 11.5% sustained advisory CAGR might seem aggressive, but reasonable. The consulting and advisory services market is starting to turn around, which increases acquisition multiples and makes inorganic growth less attractive. This is especially true for the Big Four, who have proven they can grow their consulting and advisory services businesses organically faster than any other type of firm. But for EY to accomplish its aggressive growth goals, a significant amount of that will need to come from M&A activity, which will continue to get more costly over that period."

Barclays backs 'Big Four' against audit shake-up [Independent]
[T]he UK's second biggest bank – which itself is considering changing auditor after 117 years of using PwC in one guise or another – has warned the regulator that any changes could be to the "detriment" of shareholders. In a commission inquiry submission, Barclays said: "The UK's current regime for the audit of financial statements, so far as it impacts on the business of international banking, is working for its shareholders."

Tax Reform: Coming Around the Clubhouse Turn? [Martin Sullivan/Tax Analysts]
"We're now entering the home stretch. We need your input and partnership to get tax reform over the finish line,” Baucus and Hatch wrote to their colleagues. Senators, you are not out of the starting gate. You are not even out of the paddock. 

Tax reform plan puts small breaks at risk [The Hill]

[A blank slate set-up], according to both K Street and members of both parties, gives an advantage to tax incentives with broad bases of support, like the mortgage interest deduction and the exclusion for employee-sponsored health insurance. Meanwhile, smaller tax breaks that might have been able to fly under the radar in a fight over what should stay in the tax code will face a harder time getting lawmakers’ attention if they start from scratch. “If that’s the approach they’re taking, then the really obscure provisions are going to have a hard time finding a strong champion,” Jade West of the National Association of Wholesaler-Distributors said about Baucus and Hatch.

Statements Regarding Retirement of FASB's Seidman and GASB's Attmore [AWEB]
Hey, gratitude is gratitude; even if it's in a press release. 

Get to the Bottom of It [Christopher Bergin/Tax Analysts]
CB: "We need a deliberate, independent investigation of the IRS. Last I checked conclusion-jumping is still not an Olympic sport, and it’s not an investigation either. American taxpayers need to know they can trust the IRS, and they are owed an explanation of what is going on – what is really going on. Then the problems need to be fixed, without demonizing and with as little destruction as possible. A broken tax collector serves nobody’s needs."

Fourth Of July Fireworks Scrapped At Military Bases [AP]
The failure in Washington to follow up a 2011 budget pact with additional spending cuts meant $85 billion across-the-board cuts that began in March. Budgets tightened, the military took a major hit and many federal workers absorbed pay cuts through forced furloughs. When the decision was made to forgo fireworks at Camp Lejeune, the commanding general, Brig. Gen. Thomas Gorry, said the cancellation would "ensure that we can mitigate the fiscal challenges we are currently facing." Last year's Independence Day at the base cost about $100,000, including $25,000 for the fireworks. The big issue is paying the overtime to personnel for security, transportation, logistics and safety. Base officials said they couldn't justify paying overtime when federal workers are losing pay while furloughed.

Posted in ANR