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February 8, 2023

Friday Footnotes: Strapped PwC Partners; Queen’s KPMG Talks to the Queen; CLA Goes Shopping | 12.18.20

PwC’s UK partners to take 10% pay cut as profits fall [Financial Times] PwC’s UK partners are to take a 10 per cent cut in their pay following a move by the accountancy firm to protect jobs and bonuses for other staff during the coronavirus pandemic. The Big Four firm said on Thursday that revenue rose 3 per cent to £4.38bn in the 12 months to June 30, while profit fell 8 per cent to £938m. Average distributable profit per partner dropped to £685,000.

EY’s UK partners to take smaller hit than rivals [Financial Times] Distributable profit before tax for the year to June 30 was £479m — just 0.4 per cent down on the previous period. As a result, an earlier decision to retain 20 per cent of partners’ monthly profit distributions to provide more capital and avoid job losses in the pandemic has been revised to a 10 per cent retention that EY does not expect to be permanent. Average partner pay is therefore due to be £667,000 for the year, which represents a cut of 1.8 per cent on the average 2019 figure.

Luckin to Pay $180 Million to End SEC Probe After Collapse [Bloomberg] Luckin Coffee Inc.’s collapse from a stunning accounting scandal has prompted a stiff price tag from U.S. regulators: $180 million. The Chinese coffee chain intentionally fabricated more than $300 million in sales from at least April 2019 through January of this year. To conceal the fraud, certain employees created a fake operations database, and altered bank records to reflect the bogus sales, according to the SEC.

Queen suffers awkward gaffe on Zoom call with KPMG but handles mishap with grace [Daily Express] The Queen marked KPMG’s 150th anniversary with a virtual appearance on Zoom. KPMG board member John McCalla-Leacy was speaking to the Queen alongside other members of the team when her connection appeared to go down. After a few moments, with no panic, the Queen returned and continued with the video call.

CLA acquires Blumshapiro [Accounting Today] Top 10 Firm CliftonLarsonAllen LLP announced that it will be bringing on the staff and partners of Connecticut-based Top 100 Firm Blum, Shapiro & Co. PC, effective Jan. 1, 2021. Terms of the deal were not disclosed, but Blumshapiro’s more than 500 personnel will be joining CLA, and its 78 partners will be taking the equivalent title at CLA, as principals.

New Survey Shows Continued Support for Remote Work [INSIDE Public Accounting] According to the 2020 Anytime, Anywhere Work Survey from management consulting firm ConvergenceCoachingwhich works exclusively with accounting firms, 81% of firms surveyed indicated they expect to have an increase, or a significant increase in the number of people working remote post-pandemic.

SEC Fines E&Y Member Firm For Role In $3B Homes Scam [Law360] The U.S. Securities and Exchange Commission struck a $1.5 million deal with a so-called member firm of Ernst & Young Global on Thursday for its role as the auditor of a Mexico-based homebuilder accused of multibillion accounting fraud. Mexico-based accounting firm Mancera S.C. agreed to pay just over $1 million in disgorgement, including prejudgment interest, and $500,000 in civil penalties for audit violations and “improper professional conduct” in connection with its fiscal year 2010, 2011 and 2012 audits of Desarrolladora Homex SAB de CV, the SEC announced.

Accounting firm settles FDIC claims tied to Chicago bank’s failure [American Banker] A Chicago accounting firm has reached a settlement with the Federal Deposit Insurance Corp. over its alleged role in the December 2017 failure of Washington Federal Bank for Savings. Bansley & Kiener, which denied responsibility, agreed to pay $2.5 million to resolve claims it was liable for the Chicago bank’s collapse. The accounting firm had signed off on years of financials for Washington Federal at a time when alleged fraud was taking place.

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