September 25, 2021

Audit

PwC Might Do Something No Other Big 4 Firm Has Ever Done Before

After years and years of PCAOB inspections of the Big 4 in which the percentage of audits of public companies that weren’t up to snuff have been in the 30s, 40s, and even 50s, we finally had a respectable audit report card earlier this year when Deloitte nearly had a single-digit deficiency rate in its […]

Audit Market Caps In the UK: The Financial Times Fails a Math Test

“The Glacial Pace of Audit Reform Needs To Speed Up” The Financial Times might wish to reconsider this headline, above its editorial of late last week. Global climate change considered, the metaphor may be more apt than intended, as the likely fate of the world’s glaciers is their tragic and accelerating collapse into muddy puddles amid massive fields […]

KPMG UK Got Absolutely Dragged By the FRC For Its ‘Unacceptable’ Bank Audits

The Financial Reporting Council (FRC) released its 2021 inspection reports today, which include BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars, and PwC. I’ve linked the individual reports for each firm (note they are in PDF) should you feel like wasting a Friday afternoon reading overseas audit inspection reports but we need to talk about the […]

Which Firm Was the Biggest Loser In the First Auditor Shuffle of 2021?

[Updated with corrected version of net audit fees won table from Audit Analytics.] With the first quarter of 2021 already in the books, it’s time once again to look at the winners and losers among the top 12 global and national accounting firms that participated in the first round of auditor musical chairs for 2021. […]

Audit ‘Reform’ in the UK: Hello … Is Anybody There?

It’s one thing to discuss the breadth of the UK government’s March 18 consultation paper, “Restoring Trust in Audit and Corporate Governance,” with its 98 questions spread over 232 pages, as I did recently in a conference mixing academics and practitioners. It’s quite another, and thoroughly dispiriting, to observe the public silence on the likelihood […]

Audit ‘Reform’ In the UK: The Government Finally Speaks, and Says Little

On March 18, the UK government weighed in with its long-promised consultation paper (the “Consultation), “Restoring Trust in Audit and Corporate Governance.” Ninety-eight questions, spread over 232 pages, contain much that is cautious and little that is innovative. The problem is, what is cautious would not innovate, and what would innovate is not cautious. For another day, […]

Important Audit Professional Takeaways from Botta v. PwC Closing Arguments

Closing arguments were held on April 13 in the bench trial of audit whistleblower Mauro Botta vs. PricewaterhouseCoopers. Botta, a former PwC senior manager, claims that he was wrongfully terminated by PwC in retaliation for making a whistleblower report to the SEC. Botta’s whistleblower report alleges that PwC had compromised its independence by acquiescing to […]

PwC Tried to Recruit a Former Auditor Who Is Suing Them So Don’t Ever Sweat Burning Bridges Again

When it comes time to think about leaving public accounting, which happens for 99% of public accountants except for those brave and oddly-programmed individuals who are cut out for the partner track, one of the foremost considerations in any exasperated public accountant’s mind is: how can I do this without burning bridges? From the time […]

Tweet of the Day: Ex-Crazy Eddie CFO Explains Why ‘Audits Are a Myth’

Our favorite convicted felon and career advice-giver, Sam Antar, the former CFO of Crazy Eddie, had some things to say on Twitter about the current state of audits in a reply to a tweet from Francine McKenna about EY and the Wirecard accounting scandal: I’m going to make this plain and simple:•Audits are a myth.•It […]

The Big 4 Could Use Some Auditing Lessons From Cohen & Co.

If Cleveland-based public accounting firm Cohen & Co. were an English Premier League goalkeeper, the firm would have gotten a clean sheet. Or if you’re not a fan of European soccer but like the NHL, Cohen & Co. would be like a goalie who finished the game with a shutout. In its 2019 PCAOB inspection […]

Talent-Strapped PwC Is That Desperate Ex Texting You With ‘WYD’ After You’ve Moved On

Leaving public accounting is rarely an easy decision, even when the choices are “stay or have a crippling nervous breakdown.” It’s not that the decision itself is hard, rather the consequences of taking an oftentimes necessary leap can lead to difficulties in securing subsequent employment if, as your accounting professors would have you believe, walking […]

Grant Thornton Auditors Are Just Showing Off Now

It’s fair to say Grant Thornton auditors are no longer on the struggle bus. From 2010 to 2015, the Purple Rose of Chicago had an average audit failure rate of 44% in its PCAOB inspection reports during that time frame, including a whopping 65% worth of screw-ups in the firm’s 2012 report, which gave GT […]

New SOX In the U.K.? It’s (Probably) Coming Soon

The February gloom was broken recently by the news that the British government will be introducing reforms targeting company financial reporting and audit oversight. In truth, none of this should be a surprise. There have been several accounting scandals in recent years where the directors of various companies have been unscrupulous and their external auditors […]

Thumbs down BDO LLP

Those Who Know, Know BDO … Is Consistently Terrible At Auditing

Here’s a number of the day for ya: 50.7%. That is the average failure rate of BDO USA audits in PCAOB inspection reports from 2010 to its most recent 2019 report, in which PCAOB inspectors found significant errors in 42% of audits reviewed. Public accounting firms that have been historically bad at auditing, like Grant […]

How Did RSM US Fare On Its Latest Auditing Report Card From the PCAOB?

Not too long ago, RSM US had one of the worst PCAOB inspection reports we’ve ever seen. How bad was RSM’s audit quality? R-E-A-L bad. The number in the red is … well … not a good number. That would be the number of audits the PCAOB inspected that had problems so big that the […]

KPMG Rocks signs held by a woman in a KPMG shirt

LOL, PwC: For Once, KPMG Doesn’t Have the Worst Audit Failure Rate Among the Big 4

Because it’s #TriviaTuesday, here are a couple of questions regarding PCAOB inspection reports: When was the last time KPMG did not have the worst audit deficiency rate among the Big 4? When was the last time KPMG had a lower deficiency rate than PwC? The answer to the first question is 2013’s inspection reports, when […]

Which Firm Was the Biggest Loser In the Last Auditor Shuffle of 2020?

The fourth quarter of 2020 had some new winners and losers in the game of auditor musical chairs, as there were 16 new engagements and 41 client departures among the 12 major global and national audit firms between Oct. 1 and Dec. 31, according to Audit Analytics. Of the top 12 firms, Deloitte gained the […]

The Truth About Public Accounting, Part II: PCAOB Inspection Hysteria — How to Fix It

While there is a consensus that the PCAOB’s existence has improved audit quality, it is also clear that the PCAOB has contributed an unhealthy level of hysteria to the auditing profession. That hysteria has led some professionals to make horrible choices (as seen in the KPMG inspection selection leak scandal). That hysteria has also driven […]

Deloitte Is Doing a Much Better Job Lately of Not Screwing Up Audits

While PwC waits with bated breath for the PCAOB to release the firm’s 2020 inspection report so it can presumably take an audit quality victory lap around the other Big 4 firms, Deloitte can at least say it has had the lowest audit failure rates among the Big 4 the past three years. For the […]

For Now, PwC’s Audit Quality Stinks

In Footnotes last Friday, we highlighted a recent Accounting Today article about PwC finally taking audit quality seriously what measures PwC is taking to improve audit quality. In the article, Wes Bricker, PwC’s U.S. assurance leader and former SEC chief accountant, dropped a bomb—a Bricker bomb, if you will—about the most recent PCAOB inspections cycle: […]

How Are Auditors Handling the Start of Busy Season?

How’s everyone surviving their first Monday of the new year so far? Today is a double whammy for our auditor friends. Not only is it the first official workday of 2021 after holiday break but it’s also the start of the grueling marathon that is busy season. I went on Twitter to see how auditors […]

Grant Thornton Cuts Ties With Pornhub After Everyone Realizes Pornhub Is Full of Abuse and Illegal Porn

So I was gaming with the boys the other day and my buddy asked the squad if we’d seen the stuff about Pornhub. What stuff about Pornhub, you ask? I have to admit that Pornhub isn’t among my multitude of Google alerts (PwC? Yes. Porn? Not so much), therefore as with many things my teammate […]

Boo-hoo: A Certain U.K. Online Fashion Retailer Might Have a Hard Time Finding a New Auditor (UPDATE)

[Updated on Dec. 21 with additional information.] Something called PKF Littlejohn will replace PwC as auditor of scandal-ridden U.K. online fashion retailer Boohoo. The Guardian reported earlier today: The online fashion retailer Boohoo has hired a new auditor after the resignation of the “big four” accountancy firm PwC amid accusations that workers’ health and rights had […]

Number of the Day: $868,000

That’s how much Canadian companies paid on average in audit fees in 2019, up from $621,000 in 2018, according to a post by our friends at Canadian Accountant, citing research from Audit Analytics: “Since 2007, the average amount of audit fees per Canadian company has continued to increase each year, with the largest increase coming […]

Three Former KPMG Partners Charged by SEC For Being Dirty, Dirty Cheaters

Just when KPMG thought maybe everyone had forgotten about that whole cheating scandal debacle, the SEC announced Monday it settled charges with three more dirty cheaters who once called the firm home. The Securities and Exchange Commission today announced settled charges against three former KPMG LLP audit partners for improperly sharing answers to internal training exams […]

Rumor of the Day: Some KPMG Auditors Are Getting a Break From Clients Because of Coronavirus Panic

So, some audit clients have allegedly told KPMG auditors not to come to their offices because of coronavirus concerns, according to a post on Fishbowl. We don’t know if these KPMG audit clients legitimately have COVID-19 concerns or, as one Fishbowl poster says, they just want the auditors off their backs for a bit. Anyway, […]

Busy Season Problems: Quick Client Questions, Annoying Train Whistles, Autocorrect Fails

Got a busy season problem? Don’t be shy. Email us at tips@goingconcern.com with “Busy Season Problems” in the subject line. Or you can text us at (202) 505-8885. It’s been exactly one month since tax season 2020 began. So let’s check in and see how busy season is treating our friends in tax so far: […]

Which Audit Firm Got Fired the Most In Q4 2019?

It wasn’t a stellar fourth quarter of 2019 for the Big 4 in terms of winning new public company audit clients, according to Accounting Today’s most recent report on the newest data crunched by Audit Analytics. Deloitte and EY brought on four and three new SEC-registered audit clients, respectively, in Q4, but Deloitte also lost […]

Clients Have Absolutely Had It With You Having the Nerve to Skip Lunch

There truly is no limit to the things clients will get pissed about. At least one of them is out here getting mad because his auditors clearly want to spend as little time as possible on this engagement and get the hell out of there. Auditors Skipping Lunch from r/Accounting OP sounds mad af, I […]

Who’s Ready to Count Some Inventory?

When I was going to community college, I worked at Sports Authority. And each year around this time, there was one day when we had to work all night after closing and well into the following morning doing inventory counts. Fishing lures, ammunition, tents, sleeping bags, wiffle balls, shoes, hockey sticks—you name it, we had […]

‘Big R’ Restatements Are Quite the Thing For PwC Audit Clients

All the Tesla haters are having a field day with this on Twitter. The Wall Street Journal reported today: [PwC] has had a streak of accounting problems surface recently at U.S. companies it audits, including an uptick in high-profile restatements. Its clients account for three of the five biggest restatements so far this year, measured […]

Critical Audit Matters: The Games Are On

As a guest here recently I took a look at the accumulating experience with extended auditors’ reports—the additional paragraphs that under international standards describe key audit matters (aka critical audit matters under the Public Company Accounting Oversight Board’s standards in the United States). There I noted a major gap—nobody has yet asked whether investors actually […]

Auditor Swap: It’s Curtains For KPMG as AMC Theatres’ Outside Audit Firm

AMC Entertainment Holdings put out a casting call for a new external auditor, and EY got the role. Kansas City Business Journal reported: AMC Entertainment Holdings Inc. will switch its accounting firm at the end of the year. The Leawood-based theater chain picked Ernst & Young, replacing KPMG LLP. AMC paid KPMG more than $12.7 million in audit, audit-related […]

Which Audit Firm Got Fired the Most In Q3?

Earlier this month Accounting Today reported the latest data from Audit Analytics on public company audit client gains and losses for the third quarter, with Florida-based CPA firm Assurance Dimensions picking up nine new ones thanks to an acquisition. Among firms you’ll usually see in SEC or PCAOB enforcement orders, Marcum and Deloitte were the […]

Critical Audit Matters: Does Anybody Care?

As if the standard auditor’s opinion weren’t already sleep-inducing enough. Standards in the United States now require auditors to identify critical audit matters (CAMs) in their reports on the financial statements of large public companies—things that, in the language of Auditing Standard 3101.11 of the Public Company Accounting Oversight Board, involved “especially challenging, subjective, or […]

10 Things We Learned During #AuditorProud Day 2019

Unless you’ve been living under a rock, you know that today is the fifth annual auditor lovefest known as #AuditorProud Day. There have been a lot of photos and videos posted on social media today of auditors holding balloons, wearing foam fingers, forcing awkward smiles, striking unnatural poses, and eating food of all kinds. Auditors […]

It Turns Out Clients Really Don’t Like It When Auditors Call Them Out on Their Sh*t

In shocking research presented earlier this month at the American Accounting Association’s annual meeting in San Francisco, Elizabeth N. Cowle and Stephen P. Rowe of the University of Arkansas have confirmed suspicions that clients shun audit firms with a reputation for being hard-asses. Let’s check out the abstract: We examine whether the audit market penalizes […]

EY Threatens to Raise Audit Fees ‘Cause the Mean Ole Government Keeps Busting Their Balls

I buried this story in Footnotes last Friday but thought it deserved its own post because A) it’s interesting and B) Bramwell is on vacation this week, leaving me to run the show and find enough crap to write about. So here we are. Sky News reported last week that they obtained a letter from […]

Business men engaged in a handshake

Sooooo Did Anyone Else Notice Thomson Reuters Just Bought Confirmation?

Thomson Reuters quietly buffed up its audit tool suite this week with the announcement that they’ve signed a “definitive agreement” to acquire Confirmation, everyone’s favorite way to get confirmations without using interns. The details of the deal are secret but we can only imagine it involves truckloads of money based on what we know about […]

When It Comes to Audit Quality, Deloitte Is the KPMG U.S. of Australia

And that’s not a compliment. The Australian Financial Review reports: Deloitte has attacked the way the corporate regulator assesses audit quality as inaccurate, “not fit for purpose” and too volatile, after revealing its latest inspection findings were the poorest of the big four consulting firms. The Australian Securities and Investments Commission found that in 14 […]

PCAOB Releases Teaser Trailer of 2018 Inspection Findings

Testing internal control over financial reporting, assessing risks of material misstatement, and auditing accounting estimates (you know, the yoozh) continue to trip up auditors, according to the PCAOB, which offered a sneak preview of what we can expect in 2018 audit firm inspection reports. More than 160 U.S. audit firms were inspected by the PCAOB […]

Which Firm Topped the Big 4 in IPO Audits in Q1 of 2019?

2019 is supposed to be a record-breaking year for initial public offerings. At least that’s what the experts have been telling everyone. Barrett Daniels, Deloitte’s national IPO services leader, said the IPO market in 2019 “could end up being historic,” while Jackie Kelley, EY Americas IPO leader, said “this is going to be the best […]

Audit Deficiencies Got Much Worse Among Big 4 Firms in Canada

I came across an article on the site Canadian Accountant this morning that said Canada’s audit regulator, the Canadian Public Accountability Board, recently issued its annual inspection results for 2018, finding significant audit deficiencies increased from 15 in 2017 to 34 in 2018. Thirty-four total significant deficiency findings might not seem that bad compared to […]

Robot man

Here’s Another Boring, Totally Predictable Article About How Robots Are Coming For Your Job

As far back as I can remember, I always wanted to be a gangster. Wait, no, wrong intro. Uh, as far back as I can remember, the Chicken Littles of accounting have been carrying on about the inevitability of robots taking jobs from honest, red-blooded professionals. You know, like they did at automobile assembly lines, […]

PwC Really Wants You to Be a CPA Before Senior But Will No Longer Hassle You About It

Fresh from /r/accounting comes news that PwC Assurance is no longer requiring licensure before promotion to senior which naturally led me to ask my cat who happened to be sitting next to me on the couch “wait, since when do you need a CPA to get promoted to senior to begin with?” I mean manager, […]

ernst & young report ashley madison

EY Felt the Need to Form an Independent Audit Quality Committee

If someone had told you that a Big 4 firm just created an independent committee that will advise the firm on how to improve the quality of its audits, you’d think it was KPMG, right? I mean KPMG partners stole confidential inspection information from a couple of rogue PCAOB employees because the firm’s inspection reports […]

Exposure Drafts: Auditing Standards Require You to Consider Whether Magic Is Real

Exposure Drafts appears every other Wednesday. Send your accounting cartoon ideas to editor@goingconcern.com. You can follow Greg Kyte on Twitter.

PwC U.K. Drones On and On About Using a Drone for Inventory Count Audit

While you first-years were slaving away doing year-end inventory counts of grain or cakes in an industrial freezer or dildos, PwC U.K. used a drone which captured more than 300 images of a coal reserve in South Wales owned by German energy company, RWE. It was the first time PwC used drone photography to conduct […]

Bull semen inventory count

You Can Count on Inventory Counts to Be Bad (Again) This Year

So here I am crouched over in front of my laptop on the last Saturday of 2018 when I should be outside on my bike enjoying the unseasonably warm Richmond temps. Why? Well, partially because I convinced Bramwell publishing this post on the weekend rather than on a Friday would be a good idea, but […]

NASCAR Needs Deloitte’s Help

Saw this come across my Twitter timeline the other day: ⚡@NASCAR has hired @Deloitte to audit teams’ finances and create a common accounting platform, per sources. ➖ Teams agreed to the unprecedented step to help find a new competitive balance framework and determine if a budget cap will be introduced. ?: https://t.co/k3NVwsvQx3 pic.twitter.com/eWUpQW43X6 — Adam […]

kpmg china medical

KPMG U.K. Is Giving Up Non-Audit Work on FTSE 350 Clients. Will the Other Big 4 Firms Follow?

So, Sky News broke some pretty big news in the United Kingdom earlier this morning regarding the House of Klynveld: KPMG is to cease undertaking non-audit work for the FTSE-350 companies whose accounts it supervises, becoming the first of the ‘big four’ firms to make such a pledge in the aftermath of scandals surrounding the […]

Holding out money

Hiring Executives with Audit Experience and Paying Them Well is Stupid, Says Research

Since the dawn of time, or at least since the dawn of the green eyeshade, corporations have looked to fill the C-suite with financially literate hires. And who, I ask, is more financially literate than a former accounting professional? Well, other than whoever is in charge of laundering drug money for the Sinaloa cartel, probably […]

Pair of asses

Deloitte Mexico Auditors Attempt to Phone in Sloppy Audit Work, Fail

The PCAOB has barred, fined, and censured three Deloitte Mexico audit partners for their role in the absolute bamboozle of an audit on Prestaciones Finmart, a Mexican subsidiary of Texas-based EZCORP, Inc. Finmart accounted in FY 2013 and FY 2014 for approximately 21% and 26% of EZCORP’s consolidated assets and approximately 23% and 42% of […]

Former Big 4 Audit Intern Pens Heartbreaking Tribute to Friend Who Died From ‘Overworking’

We’ve been heavy on the death and depression around these parts lately, and for that I’m sorry. I guess it’s just the nature of the game sometimes. I’m not that sorry, though, because we’re about to talk about completely preventable death some more. A Facebook post from a former Big 4 intern went viral recently […]

woman typing

Report: Big 4 Audits Are Rarely Led By Women

On this, the most sacred of #AuditorProud days, we thought we’d tackle the recent CFA Institute report [PDF] that shows women are woefully underrepresented as lead engagement partners. This data is available thanks to AuditorSearch and a hard-fought battle over the years to require partner naming on audit reports. Thankfully, that tattooing the client’s name […]

FRC Didn’t Want Grant Thornton U.K. to Feel Left Out of All the Disciplinary Fun

The Big 4 firms in the U.K. have been the target of repeated tongue-lashings from the Financial Reporting Council lately because, let’s face it, audits have been pretty damn bad. Things have gotten so desperate that EY is bringing in behavioral psychologists to improve audit quality. But the U.K. accounting watchdog’s most recent tongue-lashing wasn’t […]

Broker-Dealer Audits Are Still Sloppy, But Hey, Auditor Independence Violations Are Down, So That’s Something

The Public Company Accounting Oversight Board released its report on 2017 inspections of broker-dealer audits on Aug. 20, and once again, there was some disappointing news for those who champion audit quality. According to a PCAOB press release: In this inspection period, the PCAOB inspected 75 audit firms and reviewed portions of 116 audits and […]

Stop Me If You’ve Heard This One Before: FRC Reprimands KPMG U.K. for Crappy Audit

When it comes to the Financial Reporting Council and KPMG audits, it must be like shooting fish in a barrel. This time, the U.K. accounting watchdog fined KPMG £2.1 million ($2.7 million) on Aug. 20 following the Big 4 firm’s admission of misconduct on the audit of fashion company Ted Baker Plc’s financial statements in […]

Government Auditors Say the Institute of Internal Auditors Is Making a ‘Big Mistake’ By Phasing Out the CGAP Credential

The Certified Government Auditing Professional (CGAP) is one of three specialty certifications that are being phased out by the Institute of Internal Auditors (IIA)—and several government auditors who hold the CGAP aren’t very happy about it. “I’m disappointed but not surprised by the IIA’s short-sighted decision to phase out new applications to the CGAP,” Chris […]

PwC fdic colonial

U.K. Watchdog Blasts PwC for ‘Incomplete, Inaccurate, and Misleading’ Audit of BHS

In a leaked Financial Reporting Council report, the U.K’s accounting watchdog hammered PwC for bungling the audit of BHS, which resulted in “incomplete, inaccurate, and misleading” statements being made about the now-defunct retailer’s financial situation just before it was sold for £1, according to Accountancy Age. The article states: According to the leaked report, which […]

Judge Allows Class-Action Suit to Proceed Against KPMG Over Shoddy Miller Energy Audit

A federal judge in Tennessee on Aug. 2 declined to throw out a securities class-action lawsuit against KPMG, in which investors are accusing the Big 4 firm of screwing up the audit of now-defunct oil and gas company Miller Energy Resources Inc. In Lewis Cosby et al. v. KPMG L.L.P., the investors say they got […]

Deloitte Gobbled Up the Most New SEC Audit Clients in Q2; EY and KPMG Threw Up a Bunch of Clients

After two Utah-based firms you might not have ever heard of picked up the most new Securities and Exchange Commission audit clients in the first quarter of 2018, Deloitte was the big winner in the second quarter, snagging 15 new engagements, with a net of 13, according to Accounting Today. BDO USA was the runner-up […]

dog fails to catch ball

Audit Leaders Verbally Reaffirm Commitment to Audit Quality Since We Couldn’t Tell From Crappy Audits Lately

Last week, seven hotshots in the world of accounting and auditing stepped up and put their name on a statement “reaffirming” the profession’s commitment to audit quality. As my headline so subtly suggests, it’s a good thing someone said something because honestly it’s kinda hard to tell they’re serious given all the audit scandals, PCAOB […]

Setback in Court For Ex-KPMG Execs, As Judge Refuses to Toss Out Counts in PCAOB Inspection Info Leak Case

As Mick Jagger sings, “You can’t always get what you want.” What three former top KPMG executives and two former employees of the Public Company Accounting Oversight Board—who are accused of participating in a scheme in which confidential PCAOB inspection information was shared with the accounting firm—wanted was for their conspiracy and wire fraud counts […]

Changing the Big Audit Model: Where Might the Regulators Go?

In the Federal Deposit Insurance Corp.’s litigation against PwC over its audits of the failed Colonial Bank in Alabama, Judge Barbara Rothstein has loosed a second blast—her decision of July 2 fixed damages at $625 million for the liability spelled out at length in her decision last December. Appeals will come, making premature any crystal […]

KPMG U.K. Chairman Taking Heat for Defending Carillion Audit

An article published today by The Times in which KPMG U.K. Chairman Bill Michael defended the firm’s audit of Carillion is getting some reaction on Twitter—good for the newspaper, bad for Michael and KPMG. The article states: The chairman of KPMG has hit back at MPs in charge of the inquiry into the collapse of […]

Slim Pickings For SIG, as It Settles on EY as New Auditor

While the U.K.’s Financial Reporting Council investigates Deloitte’s 2015 and 2016 audits of SIG, the building products distributor has selected EY as its new auditor, according to the Financial Times. EY was the only Big 4 firm eligible to bid for the SIG contract, which according to The Times newspaper, is worth about £1.6 million […]

Does the ‘P’ in KPMG Stand For ‘Probes?’

Because we have two new probes into KPMG to tell you about. First, two weeks after the quality of its audit work was called “unacceptable” by the Financial Reporting Council, KPMG is being probed by the United Kingdom’s accounting watchdog over its audit of British beverage wholesaler Conviviality’s financial statements, according to the Financial Times. […]

Colonial Bank Collapse Will Cost PwC $625 Million, Reports Say

[Updated with statement from Bartlit Beck Herman Palenchar & Scott] Reports are hitting the interwebs this afternoon that a federal judge has ordered PwC to pay the Federal Deposit Insurance Corp. $625 million in damages for failing to uncover a long-running fraud scheme between its client Colonial Bank and the now-defunct mortgage lender Taylor, Bean & […]

Deloitte’s Audits of SIG Under U.K. Regulator’s Microscope

The Financial Reporting Council, the U.K.’s audit watchdog, is calling, is calling, is calling out Deloitte’s name in a probe of the Green Dots’ 2015 and 2016 audits of building products distributor SIG, according to several publications across the pond. From the Financial Times: SIG said in February it had discovered misstatements after a whistleblowing […]

KPMG Used Confidential Inspection Info to Snatch BBVA Away From Rivals, Report Says

If you missed this late last week, Francine McKenna of MarketWatch detailed how KPMG used access to confidential Public Company Accounting Oversight Board inspection information to poach a client from its Big 4 rivals. The client, Spanish bank BBVA, was one of nearly a dozen KPMG clients caught up in the audit inspection scandal. Others […]

Report: Court Documents Name KPMG Audit Clients Caught Up in PCAOB Leak Fiasco

MarketWatch reporter and friend of Going Concern’s, Francine McKenna, wrote an outstanding article today after digging through court documents obtained by MarketWatch that name the audit clients caught up in the KPMG audit inspection conspiracy. And there are some pretty big names. The Justice Department in January brought criminal charges against five former KPMG executives […]

Squar Milner

What Next For the Big 4 in the U.K.? London Is Searching

A drunk, searching on hands and knees under a street lamp, tells the inquiring police, “I’ve lost my keys – over there in the dark alley.” “Then why look here?” they ask, perplexed. “Because the light’s better here.” In the city of London, where the modern audit profession was born in the Victorian era, no […]

U.K. Accounting Regulator Chides KPMG For ‘Unacceptable’ Decline in Audit Quality

And here I thought Phil Mickelson’s meltdown on the 13th green at the U.S. Open on June 16 would be the worst thing to happen to KPMG this week. From Bloomberg: KPMG’s audit work in the U.K. is of an unacceptable standard, Britain’s accounting regulator said, fueling calls to reform the industry, including dismantling the […]

internal audit jobs

Everything You Wanted to Know About Internal Audit (But Were Afraid to Ask)

If you’d asked me for the definition of internal audit a few months ago, I would have guessed it was some sort of self-help cleansing ritual involving crystals and quinoa. You know, the type of exercise where afterward you annoy all your friends by telling them how mindful and present you are now. And they […]

audit dod department of defense

Ready or Not: Auditors Descend on Department of Defense

It’s not as cool as a multi-ship C-17 formation dropping paratroopers as a part of a training exercise (like the one that everyone thought was a UFO on Saturday night). But, our profession’s only semi-equivalent — 2,400 red-pen wielding auditors — will infiltrate the Department of Defense (DoD) this month to kick butt and take […]

big-4-punishment

U.K. Audit Regulator Encouraged to Slap Big 4 Wrists Slightly Harder

Despite what you might hear, Big 4 audit firms have it pretty easy when it comes to compliance. Yes, there a ton of rules to follow, but in the event that a firm, one (or several) of its partners and employees run afoul of those rules, the consequences range from a mild rebuke to a […]

accountants auditors data analytics resize

Watering Down Data Analytics for Dumb Accountants

Most accountants, especially CPAs, seem smart on paper. Some even live up to it in person. Others are less, um, fortunate… So, it doesn’t come as a big surprise that even our profession’s own publication called us out for being dumb, or at least naïve when it comes to data analytics: Accountants need to increase […]

accounting news kpmg liberty tax

KPMG Settles With SEC Over a Giant Failure of an Audit

KPMG has settled SEC charges for $6.2 million due to a shoddy audit of an oil and gas company. The partner in charge of the job, John Riordan, also settled to charges, agreeing to a $25,000 fine and a suspension to practice before the SEC. He can re-apply in two years. KPMG did not admit […]

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Sarbanes-Oxley 15 Years Later: Accountants Need to Speak Up Now More Than Ever

This Sunday, July 30, 2017, marks the 15th anniversary of the enactment of the Sarbanes-Oxley Act (“SOX”) of 2002. SOX emerged after the “smartest guys in the room” caused Enron to implode, and WorldCom magically erased billions in earnings overnight. The scandals shook the public’s confidence in the reliability of financial reporting and led to […]

Big 4 Auditors Are Probably Looking Forward to More Amiable PCAOB

Michael Rapoport reports in the Wall Street Journal on the waning James Doty era at the PCAOB and that he will probably exit with unfinished business: Mr. Doty, chairman of the Public Company Accounting Oversight Board, may only have months left to pursue his wish list, including a change that would require auditors to tell […]

PCAOB Inspectors Find IT Auditors on the Struggle Bus

In case you missed the news earlier this month, all of the PCAOB reports are out for the Big 4's 2015 cycle of inspections. What schadenfreude awaits us? Let’s take a look. Big picture — regarding overall deficiency rate — PwC is the winner this year. Even if PwC is only slightly ahead, the firm […]

Deloitte’s Brazil Firm Covered Up a Couple of Bad Audits

The big news in the international audit firm world today is an announcement by the PCAOB that Deloitte’s Brazil firm audited badly and then covered up that bad auditing, which is also bad. The whole thing involved a dozen auditors including the Brazil firm’s former Audit Practice Leader, former Risk and Reputation Leader and former […]

Good Enough for Government Accounting: Junk Shop Treasure and Two (Allegedly) Crooked Auditors

First the good news (treasure discovered!) and then the bad news (some auditor generals are allegedly corrupt.) Arkansas' first auditor kept a journal Whenever I'm sifting through junk at Salvation Army, I dream of finding a treasure that'll A) land me a coveted spot on Antiques Roadshow and B) fetch me a small fortune at […]

PwC Is in the Midst of a Independence Quagmire

Independence: its complicated. Except it isn’t, really. Audits firms are conflicted because they’re paid by the organizations who they’re supposed to be independent of audit clients. Most people, I think, know this yet choose to ignore it. Fine.

The Future Audit Team: Smaller, Nerdier, Expensiver

As auditing changes, naturally, so will the auditors. Technology drives a lot of this change so it stands to reason that people who understand and build technology will become the new auditors. Or, maybe accounting programs will become more technology focused. Either way, recruiting auditors will look very different and sooner than you might think. […]

Partner Names: Coming to an Audit Near You in 2017

After nearly seven years since the first concept release, the SEC approved the PCAOB's rules for disclosing the names of audit engagement partners and other participating firms. You can read the entire SEC order if you find the securities regulation apparatus fascinating. Personally, I think it's interesting that another round of comments is allowed prior […]

PCAOB: Just Stop Altering Audit Workpapers Already

Are you an auditor? Do you have any public company clients? Have you recently been notified that the PCAOB will be inspecing the audit of one of those public company clients? Are you now just remembering that you may have left something out of the audit documentation that would definitely get you in trouble with […]

Audit Firm Violates Independence Spectacularly

Has it been awhile since we've discussed an egregious independence violation committed by an audit firm? Yes, I think it has. The drought ends with this PCAOB disciplinary order in the matter of Moss, Krusick & Associates ("MKA") and Joseph M. Krusick, CPA. Krusick was the engagement partner on Credit One Financial, Inc. a company […]

Don’t Let the Completeness and Accuracy of System-Generated Reports Be a ‘Leap of Faith’

I have noticed, much to my chagrin, a lot of CPAs don’t take learning about accounting information systems very seriously. In college, so many students write it off because “it’s not relevant” and, you know, that belief is only true if you end up working in a large firm and have the luxury of passing […]

Government Audits Turn Up Some Scary Stuff

In 2016, government auditors in Washington state discovered $420,300 in unemployment benefits paid out to prisoners. Prisoners, by the way, are ineligible for unemployment benefits. It feels like an episode of Orange is the New Black (another quality show I've been binge-watching in my spare time), but as far as I know, it's still just […]

What Auditors Ought to Know About the Internet of Things

Whenever I think about the Internet of Things ("IoT"), my mind jumps to a Disney original movie from 1999 called Smart House. If you haven’t seen it (no real surprise), here’s a clip. Fast forward less than two decades and “smart” technology is ubiquitous. As of 2013, there were more internet connected devices than people […]

Lying About Your Financial Statements Being Audited Still Frowned Upon

It's worth mentioning since the SEC had to make an example out of someone: The SEC alleges that American Growth Funding II LLC and Ralph Johnson promised investors 12-percent annual returns and falsely claimed its financial statements were being audited each year.  AGF II, which raises capital from investors to provide loans to businesses, also […]

Coming Soon-ish: Greener Auditing

Well, maybe. Eventually. Some time in the future. Over at the Harvard Business Review, there's a brief Q&A with Professor Robert Eccles about sustainability accounting standards. It's interesting because, as we've mentioned, sustainability (among other things) could become a big part of the accounting profession's future. We first covered sustainability accounting and reporting in an […]

PCAOB Finally Gonna Vote on Partner Disclosure

The PCAOB announced earlier today that it will hold an open meeting next Tuesday to vote on the disclosure rules for naming the audit partner and other accounting firms that participated in the audit. I'm told that it will be a unanimous approval. With that in mind, it's more than a little bit ironic that […]

Who’s #AuditorProud?

So here's a thing that is happening tomorrow: Use #AuditorProud & #PwC on Thursday to share your pride in the #accounting profession! pic.twitter.com/kp6M4TwozG — Bob Moritz (@Bob_Moritz) December 8, 2015 This whole thing is being spearheaded by the Center for Audit Quality who put out a fact sheet for anyone who's not familiar with how […]

What’s On Your Audit Partner Disclosure Wish List?

Earlier this week, we learned about a couple of Grant Thornton audits that were less than perfect. The partner on those engagements, Melissa Koeppel, had a poor track record with four restatements in two years, including the one that resulted from the infamous Koss Corporation fraud. No one outside of Grant Thornton had knowledge of […]

Fake Occupants Caused Some Some Problems in Grant Thornton’s Audit of Assisted Living Concepts

The SEC announced a settlement with Grant Thornton and two partners today over some bad audits that went down in America's Dairyland. The firm will pay $3 million in fines, plus forfeit $1.5 million in audit fees with interest. The partners, Melissa Koeppel and Jeffrey Robinson agreed to a $10k fine and a 5-year ban and $2.5k and 2-year ban, respectively.

PCAOB Member Wants a Closer Look at Tax Services and Auditor Independence

Last week the PCAOB approved its 2016 budget and also its "strategic plan" through 2019. That might sound like a more potent sleeping aid than tryptophan, but sometimes board members say interesting bits worth sharing and, today, we have some for you. Each of the board members made pretty benign statements — quibbles about the […]

A Surprising Number of Accountants Think Accountants Are Incredibly Corrupt

A recent survey of 1,696 global accountants from CareersInAudit.com found that accountant don't think too highly of other accountants: [I]t would appear that the accountancy profession is still not squeaky clean with all its working practices. 20% of respondents believe between 10–20% of those in the profession have helped their clients create a set of […]