Ernst & Young Says It First Found Accounting Issues at Luckin [Wall Street Journal] EY said it uncovered the problems at China’s Luckin Coffee Inc., which hammered the stock price of the upstart challenger to Starbucks Corp. in the country and cast doubt over a large part of its sales last year. Luckin’s Nasdaq-listed shares fell more than 75% Thursday after it said an internal investigation indicated its chief operating officer and others had fabricated much of its reported revenue in 2019. Shares were up slightly Friday morning.
Kyobo Life Insurance Files Complaint against Deloitte Anjin with US Accounting Oversight Board [Business Korea] Kyobo Life Insurance announced on March 31 that it has filed a complaint against Deloitte Anjin Accounting Corp. in Korea with the Public Company Accounting Oversight Board (PCAOB) of the United States for violating evaluation standards in calculating its fair market value (FMV). Kyobo Life claims that Deloitte Anjin made a mistake in setting the time of evaluation in calculating Kyobo Life’s FMV. Financial investors exercised put options on Oct. 23, 2018, but Deloitte Anjin calculated Kyobo Life’s FMV based on the stock prices of major competitors such as Samsung Life Insurance and Orange Life for the one-year period from June 2017 to June 2018, Kyobo Life asserted.
Remote Work, Coronavirus Disruption Pose Hurdles for Auditors [Wall Street Journal] Work-from-home mandates intended to stop the spread of the novel coronavirus are complicating auditors’ efforts to count inventory, assess changes in internal controls and track down evidence needed to sign off on companies’ financial statements, auditors say.
UK accountancy and law firms prepare to withhold partner payouts [Financial Times] Some of the UK’s largest accountancy and law firms are preparing to withhold partner payouts to try to reduce the financial impact of the coronavirus pandemic. It is just one measure being considered among the ‘Big Four’ accountancy firms — KPMG, Deloitte, PwC and EY — and their smaller rivals, BDO and Mazars, as well as big law firms such as Linklaters, to preserve cash as fees from clients fall away.
PwC Can Force Arbitration of Employee’s Race Bias Claims [Bloomberg Tax] PricewaterhouseCoopers LLC can resolve an employee’s race discrimination claims in arbitration, the Fourth Circuit said, ruling that a federal law that would keep the case in court no longer applies to the accounting firm. Shannon Ashford, who is black and worked as a professional consultant for the company, sued after being passed over for several promotions. Her claims of bias and retaliation under Title VII of the Civil Rights Act of 1964 must be arbitrated because PwC currently isn’t covered by a Defense Appropriations Act amendment that went into effect in 2010, the court said.
Deloitte to shut down for a week amid COVID-19 crisis [Australian Financial Review] Deloitte will shut down for a week in April, forcing the entire firm to take one week of annual leave, and has issued an urgent request for audit and assurance partners to quickly bill their clients as the firm looks to offset a drop in work due to the COVID-19 outbreak. The firm, which is trying to avoid job cuts, has also warned staff to be “as productive as possible” while working from home or risk redundancy.
Grant Thornton offers UK staff voluntary sabbatical or dramatic pay cut [Financial Times] The UK’s sixth-largest accounting firm told staff on Tuesday morning they could volunteer to take a sabbatical until June, for which they will receive 30 per cent of their salary, or they can sign up for a 40 per cent reduction in their hours and pay until the end of May. It has given them until Friday lunchtime to put themselves forward.
The Big Four’s Legal Services Will Emerge Stronger in a Post-Pandemic World, PwC Leader Says [Law.com] The coronavirus crisis is driving a “flight to quality” among buyers of legal service—a move that will further strengthen the legal arms of the Big Four accounting firms, according to PwC Global Legal Services head Tony O’Malley. “I’m feeling positive about how we’re placed over this next period in the crisis and I’m confident that we’re going to come out of it stronger,” he said.
EY resigns as auditor of Travelex owner Finablr as board members quit [City A.M.] EY has resigned as auditor of Finablr after the troubled payments firm could not accommodate some adjustments it requested, including changing the composition of its board. Trading in the London-listed firm’s shares was suspended earlier this month after Finablr warned it was preparing for potential insolvency. It has launched an investigation into its finances.
Brian Eaton elected Chairperson of the RSM International Board [RSM] Eaton, who is CEO of RSM South Africa, succeeds Mike Kirley of RSM US who is retiring.
