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November 29, 2022

Accounting News Roundup: Terminating Deloitte ‘with a vengeance’; Grant Thornton’s 2017 Prediction; Big 4 Advisory Outguns Audit | 10.07.13

Mass. IT project is latest black eye for Deloitte [BG]
From Florida and Pennsylvania to California, multimillion-dollar projects managed by the New York company have come in behind schedule, over budget, and riddled with problems. It is a situation that has been repeated in Massachusetts this summer; Deloitte was two years late and $6 million over budget in delivering a system to manage unemployment claims, and, separately, the Department of Revenue fired the firm for falling behind on a $114 million tax-system overhaul mired in errors. In Florida’s Miami-Dade County, school officials fired Deloitte in 2009, partway through an $84 million contract to overhaul the district’s computer system. After paying Deloitte $30 million and having “virtually nothing” usable they could rescue, Superintendent Alberto Carvalho said, the district turned the project over to its in-house technology department, which completed it on time and within the budget. “After much review the best thing to do was terminate Deloitte, and we did with a vengeance,” Carvalho said.

Congress Looks for Elusive Way Out of Government Shutdown [Bloomberg]
The latest.

Grant Thornton smashes into Big Four’s territory [Independent]
Grant Thornton will double its FTSE 250 audit work by 2017 following hard-hitting reforms by regulators to smash the dominance of the Big Four accountants, the bean-counter’s chief executive has claimed. Scott Barnes said the Competition Commission’s demand that listed firms compete the audit role every five years will help loosen the stranglehold that KPMG, PricewaterhouseCoopers, EY and Deloitte have on the market. […] Mr Barnes predicted that Grant Thornton will have 15 FTSE 250 clients within three to four years. At present, the Big Four audit more than 90 per cent of the FTSE 250 and their dominance becomes even greater when it comes to FTSE 100 companies.

Big Four bulking up consulting muscle [Crain's]
A decade after the Sarbanes-Oxley Act restricted the advisory work they can do for audit clients, the Big Four are rebuilding lucrative and conflict-prone advisory practices—to the dismay of critics who fault the firms for missing signs of the financial crisis. Advisory revenue (excluding tax) at Deloitte LLP, Ernst & Young LLP, PricewaterhouseCoopers LLP and KPMG LLP last year surged to $36 billion for their global networks, a rate four times the 3.4 percent gain in audit fees, according to Monadnock Research LLC in Gloucester, Mass. KPMG's audit revenue, the smallest of the Big Four, actually fell.

At the S.E.C., a Question of Home-Court Edge [NYT]
The S.E.C. has many weapons in its arsenal. One that is not so well known is its internal court system, overseen by administrative law judges. This is the place where the S.E.C. brings civil enforcement suits that it has not, for various reasons, filed in federal district courts. Because of a recent change in the law, these tribunals are likely to hear more cases. “Our expectation is that we will be bringing more administrative proceedings given the recent statutory changes,” Mr. Ceresney said last week. “But we evaluate the appropriate forum in each case and make the decision based on the particular facts and circumstances.” […] But some legal experts say these proceedings suffer from potential bias because the judges operate within the agency bringing them. The possibility of a home-court advantage or a sympathetic adjudicator, critics say, raises questions of fairness, especially for individuals defending themselves in these matters. “If you get caught up in the web of an agency investigation, you’re investigated, prosecuted and judged by agency personnel,” said Ronald J. Riccio, former dean of the Seton Hall Law School and a professor of constitutional law there. “Even if it doesn’t create actual bias, it doesn’t look good.”

City Could Raise Amusement, Cigarette, Liquor And Lease Transaction Taxes [CBS]
Rahm Emanuel is exploring the possibility of raising the city’s tax on amusements, cigarettes, liquor and personal property lease transactions to chip away at a $338.7 million budget shortfall, City Hall sources said Friday. New revenues are needed to close at least part of a gap that will balloon to nearly $1 billion next year without a solution to the city’s pension crisis. Property and sales tax increases have been ruled out. So have increased taxes on natural gas, bottled water, soft drinks and parking, which the mayor has already targeted twice. But, that leaves a host of taxes still on the table.

Boy Boards Plane To Vegas At MSP Without Ticket [AP]
A 9-year-old Minneapolis boy was able to get through security and onto a plane at the Minneapolis-St. Paul International Airport without a ticket, an airport spokesman said Sunday. Security officials screened the boy at airport shortly after 10:30 a.m. Thursday, Metropolitan Airports Commission spokesman Patrick Hogan said. The boy then boarded Delta Flight 1651, which left for Las Vegas at 11:15 a.m. The flight was not full, Hogan said, and the flight crew became suspicious mid-flight because the boy was not on their list of unattended minors. The crew contacted Las Vegas police, who met them upon landing and transferred the boy to child protection services, Hogan said. Minneapolis Police went to his residence. Parents told officers they “hadn’t seen much of him today.” WCCO contacted the Transportation Security Agency (TSA) Sunday morning, during which a spokesperson said staffing is currently low due to the number of employees furloughed in the wake of the federal government shutdown.

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