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.
AI
Australian academics apologize for false AI-generated allegations against big four consultancy firms [The Guardian]
A group of academics has offered an unreserved apology to the big four consultancy firms after admitting they used artificial intelligence to make false allegations of serious wrongdoing in a submission to a parliamentary inquiry. The accusations have been met with scorn by the firms, concerned that inaccurate information has been given parliamentary privilege to unfairly tarnish the reputation of its staff. The academics, who specialise in accounting, were urging a parliamentary inquiry into the ethics and professional accountability of the consultancy industry to consider broad regulation changes, including splitting up the big four. Part of the original submission relied on the Google Bard AI tool, which the responsible academic had only begun using that same week. The AI program generated several case studies about misconduct that were highlighted by the submission.
How will AI affect accounting jobs? [Thomson Reuters]
While 51% of accounting professionals believe that ChatGPT and generative AI should be applied to tax, accounting, and audit work, opinions are divided about the usefulness of AI tools. One of the primary concerns centers on how AI will affect accounting jobs and the career outlook for tax professionals.
Big 4
Deloitte’s new practice to check business credibility [Mint]
Consulting firm Deloitte is set to introduce a practice to help businesses measure the extent of trust regulators, investors, customers and the public place in them to help them identify areas for improvement and raise their trustworthiness among stakeholders. The consulting firm is currently assessing the top 1,000 companies by size in India, including listed ones, based on about 90 parameters to figure out where they stand in terms of stakeholder trust. The ranking will be privately shared with the companies. Deloitte expects there would be takers for the new service given that regulators, customers and investors attach a premium on trust, and businesses going for public offers could use their ranking to help investors decide.
Former EY partner in tax case ‘took $700k in unauthorised payments’ [Australian Financial Review]
EY Australia outed itself as the employer of a former partner who allegedly promoted tax exploitation schemes and revealed he took more than $700,000 in unauthorised payments related to the allegations. The news – first revealed by The Australian Financial Review – that the Commissioner of Taxation was suing an ex-partner in the Federal Court piled further pressure on the big consulting firms following the PwC tax leaks scandal. The Australian Tax Office alleges the former EY partner promoted three so-called Tax Loss Access Schemes to seven clients between November 2016 and April 2021. The ATO sent a notice to EY in June 2021 which first raised some of the allegations that are now before the Federal Court.
PayPal Names Jamie Miller as Chief Financial Officer [PayPal Newsroom]
Miller spent a brief period at EY twiddling her thumbs ahead of Everest.
Miller most recently served as Global CFO of EY, having joined to lead the separation and IPO of its strategy, tax, and consulting business. Between June 2021 and January 2023, she served as CFO of Cargill where she was responsible for all financial activities of the company, and also assumed corporate strategy and business development responsibilities in April 2022.
KPMG UK promotes 56 new partners – but none of them join equity ranks [Financial News]
The Big Four accountancy firm introduced a salaried, non-equity partner rung in 2021. The rank means that staff get the coveted partner title, but only a small proportion of their pay is based on the firm’s profits.
PwC Australia Bad Advice Caused $17 Million Loss, Company Claims [Bloomberg Tax]
PwC is being sued in Australia by a financial firm that alleges it lost approximately A$27 million ($17 million) because of accounting advice from the Big Four firm. Pioneer Credit Limited said in a stock exchange release Tuesday that it was suing PwC “for negligence, breach of retainer, and misleading or deceptive conduct.”
Majority of Canadian businesses concerned about meeting new modern anti-slavery law obligations [KPMG Canada]
With most Canadian businesses preparing to comply with new federal anti-slavery legislation, more than half say they are worried about their ability to properly assess and manage supply chain risks and meet reporting timelines, finds a newKPMG in Canada survey. KPMG’s 2023 Private Enterprise™ Business Survey found that 56 per cent of small- and medium-sized businesses (SMBs) in Canada are concerned about their ability to map out forced labour and child labour risks across their entire supply chain and 54 per cent worry about their ability to manage those risks.
FASB
Dozens of Firms, Groups Balk Over Proposed FASB Disclosure Rules on Income Statement Expenses [Thomson Reuters]
Some of the nation’s biggest companies and trade organizations told the FASB that its proposed disclosure rules to disaggregate income statement expenses would be tough and costly to adopt—recommending alternatives they say would be a better fit. Aspects of Proposed Accounting Standards Update (ASU) No. 2023-ED500, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, would wreak havoc on systems with little benefit to investors, according to comment letters submitted to the FASB by the Oct. 30, 2023, deadline—coming from big companies, and groups like the Retail Industry Leaders Association (RILA), Financial Executives International’s (FEI) Committee on Corporate Reporting (CCR), and the U.S. Chamber of Commerce. The push back on costs is not a surprise, as the FASB already alluded to it during discussions, stressing there was no way around that if investors are to get some of the information they have pressed for, for years. But the letters say the full benefits are not that apparent, and thus the guidance needs to be aligned.
News
Trump sons deny knowing of financial statements at heart of $250m fraud trial [The Guardian]
Trump’s eldest sons claimed on Thursday that they had no knowledge of the financial statements at the heart of the family’s $250m fraud trial. Eric and his older brother Donald Trump Jr claimed in court that they had relied on accountants and others to make sure their financial records were correct. “I never had anything to do with the statements of financial condition,” Eric Trump testified. In a sometimes tetchy exchange, Eric Trump was asked about emails that showed subordinates asking for information about Trump’s financial reports. “Hi Eric, I’m working on your dad’s annual financial statement,” read one email from Jeffrey McConney, the Trump Organization’s former controller, asking for details about a Trump property. Eric Trump consistently denied specific knowledge and said he was “not very familiar with my father’s statement of financial condition”. At one point Eric Trump said “we’re getting tripped up” and said he had not realized at the time that he was being asked for information related to financial statements. “People in the company have conversations with you all the time, and you provide them with answers when you can,” said Trump. “I think I was 26 years old,” he added. “I was not aware of it, I never worked on it, and I didn’t know about it until this case came into fruition.” The prosecutor Andrew Amer produced various documents that he claimed disputed that assertion. Another email from McConney had the subject line “F/S” in it, which stands for “financial statement”. Amer pointed out that McConney was explicitly asking Eric Trump about the financial statement. “You would have understood at the time you received this email that your father had an annual financial statement,” Amer said.
Chinese officials must feel they are being ‘followed by shadows’, President Xi Jinping says [South China Morning Post]
In his speech, Xi told the auditors that they must live up to their responsibilities by ensuring there are no blind spots in their work and the party’s policies are implemented as intended. “The audit targets should feel that auditing follows them like a shadow, and they feel someone is watching over their shoulder at all times,” he said, stressing the need to keep a close watch on all units that manage public funds, state-owned assets and resources.
Firm Watch
Accounting and consulting firm Grant Thornton names new Seattle, Portland lead [Puget Sound Business Journal]
Grant Thornton LLP has named Lisa Heacock as its new managing partner for the Seattle and Portland markets. Grant Thornton announced the hire Tuesday, and a spokesperson said she is replacing Dan Powers, who retired after 19 years at the firm. She has been with Grant Thornton for more than five years, according to her LinkedIn page, and was most recently a partner in Grant Thornton’s Los Angeles office.
Choreo acquires $8.1B wealth management unit of accounting firm BDO [InvestmentNews]
Choreo, a Chicago-based registered investment advisor, is acquiring the wealth management business of accounting firm BDO USA, which oversees roughly $8.1 billion in assets under advisement or management, the firm announced Wednesday. The transaction closed Tuesday, the firm announced; terms were not disclosed. Choreo also announced that it is joining the BDO Alliance USA Business Resource Network as an independent member, which will provide it with opportunities to serve BDO USA, its clients and other BDO Alliance USA members and clients. Thirty-three employees will join Choreo from BDO, including 17 advisors. The deal also adds seven locations to Choreo’s nationwide network.
Former Citi call center in Gray purchased by accounting firm [WCYB]
What firm? Who knows!
A vacant commercial building in Gray that Washington County, Tennessee Schools had expressed interest in transforming into a school has been sold. According to Johnson City officials, the former Citi call center building has been purchased by a local accounting firm. The firm is now seeking to rezone the property from industrial to business. Plans call for the building to be remodeled into the corporate office for the firm, plus additional commercial development.
Talent
EY survey identifies opportunities to strengthen the CPA pipeline with increased focus on students’ career priorities [PR Newswire]
Senior executives and students alike are optimistic about the future of the accounting profession, according to a new survey from Ernst & Young LLP (EY US). However, the findings also uncover a disconnect in how a career in accounting should be promoted and what the next generation of accountants is looking for in an employer.
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