Footnotes is a collection of stories from around the accounting profession curated by actual humans and published every Friday at 5pm Eastern. While you’re here, subscribe to our newsletter to get the week’s top stories in your inbox every Tuesday and Friday. See ya.
Talent
Dear Recent Grads: Accounting is Cooler Than You Think [LinkedIn]
A tipster sent in this recent LinkedIn post by CBIZ president Chris Spurio, calling it “tone deaf” and “dishonest.” Added our tipster, “No mention of the long hours (that everyone on earth is acutely aware of) or the modest salaries that await in the industry. No mention of the boring nature of likely tasks such as control testing and cranking out returns.”
We just want to call attention to the image he chose. Working from the beach, so fun.
Fixing the Crisis in Accounting [The CPA Journal]
Related to the above post:
Individuals, companies, and professional organizations need to be more intentional in getting young people excited about joining the accounting profession. Accounting is the language of business: If you understand this language, you can work creatively across the world of finance. CPAs are now involved in strategic planning, finance, human capital and people management, and technology, and are taking leadership roles in all these areas. This broad horizon of opportunities is what needs to be emphasized in any outreach to students and to CPA exam candidates. Success in the accounting profession requires significant investments of time, dedication, and perseverance. The field is rapidly evolving, thanks to emerging global opportunities, ever-changing regulatory requirements, and complex new business models. Businesses will continue to need greater numbers of accounting professionals. We must be ready to commit to dismantling the hurdles that impede entry into the profession. Only in doing so will we be able to attract the talented, motivated CPAs needed by the businesses of today—and tomorrow.
Graduates may lose job offer at KPMG as a result of marking boycott [The Tab]
Might need a British to American dictionary for this one.
Students who have secured places on competitive KPMG graduate schemes may lose their job offers as a result of the ongoing marking boycott taking place at almost every UK university. A spokesperson for the firm told The Tab: “We are continuing to monitor the situation and will review options for those that might be impacted on a case-by-case basis, helping to minimise the potential impact as far as possible.” Lecturers have been refusing to carry out marking and other assessment work like exam invigilation since April, leaving students without grades. This follows weeks’ worth of strikes earlier this academic year, as staff are in an ongoing campaign for better pay and pensions.
Millennial and Gen Z employees are rejecting assignments, turning down offers, and seeking purpose. Here’s what they expect of their employers, according to Deloitte’s latest survey [Fortune]
Having tracked the priorities, concerns, and motivations of the youngest generations in the workforce for the last 12 years, the annual Deloitte Global Gen Z and Millennial Survey has revealed a consistent theme: Young employees want their employers’ values to be aligned with their own–and they want to drive societal change through purposeful and meaningful work.
PwC Tax Scandal
PwC tipped off Google on timing of Australian tax law [Financial Times]
A Google employee received an email from a PwC partner in August 2015 that said Canberra would be pressing ahead with a tax clampdown on multinationals the following year, despite pressure to delay the new legislation. PwC last month disclosed details of the email to lawmakers, with the name of the company redacted. The firm said the company was unaware the information was confidential. Google confirmed it was the company involved following a Reuters report on Wednesday. “While it is disappointing to learn that PwC had inappropriately shared information, it had no bearing on our compliance with the Multinational Anti-Avoidance Law,” Google said, referring to the 2015 legislation. The company added that changes Google made to its tax structure in Australia were done after the new law was passed and after engaging directly with the Australian Taxation Office, rather than simply on the advice of PwC.
Uber, Facebook linked to PwC Australia tax schemes based on leaked government plans [Reuters]
There’s more…
PwC Australia advised Uber and Facebook how to restructure in face of an Australian law clamping down on tax avoidance, but both companies said on Friday they were surprised to find out PwC’s advice may have been based on leaked government plans. Uber and Facebook on Friday said they had received advice from PwC Australia about the law. Facebook said it turned to PwC after the draft legislation was released, which was in September 2015, while Uber did not spell out the timeline of when PwC began advising it. However, both companies expressed surprise about the firm’s breaches of government confidentiality. “We had no knowledge their advice may have been based on improperly obtained information,” an Uber spokesperson said.
Allegro says independent board to oversee PwC Australia’s government business [Reuters]
Australian investment firm Allegro Funds said on Tuesday it would set up an independent board to oversee PwC Australia’s government practice business, which it bought last month, and committed A$100 million ($67 million) for transition costs. Allegro said it had reached a binding term sheet on the sale, with the new business to be called Scyne Advisory and fully independent of PwC. It will have about 1,750 employees. An ethics subcommittee will also be created, chaired by a former judge of the Federal Court of Australia, to check on the probity of employees joining Scyne Advisory, as well as future conflicts and code of conduct. Members of PwC’s government health infrastructure and defence, and trust and risk practices will lead Scyne Advisory in the short term, before a CEO search is conducted by the board and the leadership team appointed.
News
Chris Rokos reaches settlement with Deloitte over £40mn tax bill [Financial Times]
Hedge fund manager Chris Rokos has reached a settlement with Deloitte over claims he received bad advice on a failed investment scheme that left him with a £40mn tax bill. The billionaire had sued the Big Four firm in London’s High Court, alleging Deloitte was in breach of its duties when it advised him on an enterprise zone investment 14 years ago in north-east England.
Study: Deterrence a major factor in bringing in more money from IRS audits [Journal of Accountancy]
The deterrence effect of IRS audits plays a major role in putting more money in the nation’s coffers, and this effect is especially striking for the highest-income filers, according to a paper by researchers at Harvard University, the University of Sydney and Treasury. The paper, “A Welfare Analysis of Tax Audits Across the Income Distributed,” published in June, is based on an analysis of about 710,000 in-person audits of individuals from 2010 to 2014. The researchers found that an additional $1 spent on audits of top earners (taxpayers above the 90th income percentile) brings in over $12 in revenue. In comparison, audits of below-median income taxpayers yield $5, the paper said.
Audit
US Renews Audit Inspection of China Firms as Tensions Mount [Bloomberg]
US audit officials have started a fresh round of inspections of New York-listed Chinese companies in recent weeks as tensions mount between the world’s two largest economies. The Public Company Accounting Oversight Board sent a team to Hong Kong last month to review 2022 audit reports of some of the most high-profile Chinese stocks listed in the US, according to people familiar with the matter who asked not to be identified discussing private information. About a dozen Chinese firms will be inspected this time, including Tencent Music Entertainment Group, Didi Global Inc. and NetEase Inc., said the people. That’s a bigger batch than the inaugural round in the third quarter last year, they added.
UK regulator tells auditors to justify ditching risky clients [Reuters]
Britain’s auditing watchdog warned accountants on Thursday that they risk breaching a recently introduced industry code if they shy away from checking the books of problematic companies, such as those deemed to have weak management controls. The Financial Reporting Council (FRC) said its new audit firm governance code, which came into effect in January, states that auditors must take account of the public interest when they take on or decline work. “We will be concerned in situations in which the firms that are the most competent and capable to undertake an audit either resign, do not re-tender, or decline an invitation to tender with no consideration of the public interest implications,” the FRC said in its annual health check of audit quality at seven firms.
UK regulator calls out BDO and Mazars for ‘unacceptable’ shortcomings [Financial Times]
The UK accounting regulator has criticised BDO and Mazars for “unacceptable” shortcomings in their audits, underlining the challenge the groups face in loosening the grip of the Big Four firms on the market. In its annual review of audit quality, the Financial Reporting Council highlighted the recurring failings of the two firms while also acknowledging the progress they had made over the past year.
Practice
Navigating transformation in an established CPA firm [Wolters Kluwer]
Taking the lead at an established CPA firm, as opposed to starting a new firm from scratch, has plenty of benefits. However, an established firm will already have an established culture, so new leaders will need to approach any transformation strategically. To ensure a successful transition and set yourself up for future growth, consider these four key steps.