September 27, 2022

Accounting News Roundup: PwC and Digital Asset; Nonprofit Problems; CFOs Down on Reporting | 02.18.16

PwC and Digital Asset
You've probably noticed but we have a bit of blockchain fever around here. Chances are, we caught it from EY. The latest news of accounting firms diving headfirst into speculative technology is that Digital Asset and PwC (Accenture and Broadridge, too) have announced a "non-exclusive strategic business relationship." Maybe this means other Big 4 firms can play, too? It's not clear. Anyway, the press release is filled with buzzy blockchainy goodness:

“We are excited to enter into relationships with Accenture, Broadridge and PwC and are already working with them to provide value to our clients and the industry,” said Blythe Masters, CEO of Digital Asset. “These alliances will accelerate innovation, drive growth and broaden our reach in different segments across the world.” Digital Asset's distributed ledger solutions improve post-trade processing efficiency and security, while reducing cost, latency, errors, risk and capital requirements. These partnerships will enable Digital Asset to increase the scope and scale of its reach, while aligning resources and capabilities to deliver the highest levels of consistency and quality to clients globally.

Specifically for PwC:

PwC’s goal is to offer Digital Asset's clients globally available, on-demand services across strategic, business, and technical domains. The core focus will be on helping PwC’s clients get educated and evaluate the best opportunities to utilize Digital Asset solutions, with PwC specifically offering clients a variety of discrete services to execute proof of concept engagements.

I think what's happening here is that if Digital Asset clients need some big, strong professional services firm to do some stuff, PwC will come running. Likewise, if PwC has clients who won't stop asking them about "the blockchain thing" someone will hand them a glossy piece of marketing that attempts to explain what blockchain is and how Digital Asset does whatever it does. Then there's the "discrete services to execute proof of concept engagements" which is all very mysterious and confusing and exciting.

PwC FinTech partner Haskell Garfinkel said that this partnership shows the firm's commitment "to solve the most complex problems businesses face at speeds and costs not yet imagined." So hopefully they'll let us know when they have the speed and costs imagined. 

Audit reveals inadequate accounting at St. Vincent de Paul [TDN]
Nonprofits are like regular businesses except they rely on donations and volunteers. That is, they aren't really like businesses at all! From a fraud detection standpoint, however, they are like businesses in the sense that adequate internal controls will provide some safeguards around their assets. But, again, because they rely on donations and volunteers, sometimes things like internal controls aren't a high priority.

A recent audit of the Society of St. Vincent de Paul, one of the area’s major charitable organizations, found that the nonprofit lacked accounting safeguards to protect against fraud.

No actual fraud was found, but the audit dinged the organization for not addressing the problem after it had been identified in a previous audit early last year.

The new audit, conducted by the Longview accounting firm Booth Davis & Associates, found that the nonprofit did not properly segregate accounting duties. According to the report, during most of the fiscal year ending Sept. 30, 2015, "one or two volunteers performed much of the accounting." 

The idea that donated money could just walk out door is not something a nonprofit organization wants. I suspect people who like to give generously would be less likely to give generously when these kinds of problems are brought to light. Those same people probably don't want to hear the president of the organization saying things like this:

Bacon explained the organization early last year requested an audit after money was stolen from the St. Vincent de Paul Society in Tacoma. A former bookkeeper there was arrested in January last year on suspicion that she defrauded the organization out of more than $500,000 from at least 2006 to July 2013. The fraud was discovered early in 2014.

“We said ‘Golly, we ought to order an audit because we want to be seen as squeaky clean,’ “ Bacon said. However, Bacon said they hadn’t made a priority of fixing the problem, which was highlighted again in the latest audit.

“We asked to have the audits because we wanted everything to be clear, and we were a little slower in correcting things than we should have been,” he said.

Bacon sought to assure the public that the organization is managing its money carefully.

“We’re taking care of our money,” he said. “We just haven’t done it officially very well yet.” 

I'm no PR expert, but statements like, "we were a little slower in correcting things" and "Golly, we ought to order an audit because want to be seen as squeaky clean" doesn't instill much confidence. Also, if you are seeking to assure the public that you are managing money carefully, saying, "We just haven't done it officially very well yet," is probably one of the last things you should say.

Previously, on Going Concern…
Leona May wrote about the time she failed and passed REG during busy season. In Open Items, someone wants to know if staying until partner to get the title is a good idea.

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