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Hiring
‘There’s definitely an accountant shortage out there’: MBAs have become the go-to degree and companies are struggling to hire enough CPAs [Fortune]
The next generation of accountants and auditors is in demand, but Ben Lansford, an accounting professor and director of the Master of Accounting program at the Jones Graduate School of Business at Rice University explained why some are hesitant. “Accounting is difficult,” he says. “It’s just a tough subject area, and you need a fifth year of college education to qualify to sit for the CPA exam. It makes the major less appealing to a lot of people.” But what needs to be communicated to students and young professionals is the time and energy is worth it, Lansford says. “It’s still a good path,” he says. “A rock-solid foundation.” The Big Four accounting firms are even reaching out to high school students to share that message and creating more flexible work environments, Lansford says.
nO oNE wAntS tO wOrK AnYmORe
Big 4
‘Behemoth’ big four consulting firms keep getting bigger [Australian Financial Review]
Income at the big four consulting firms jumped 17 per cent to hit $9.91 billion last financial year, representing 70 per cent of the total revenue earned by Australia’s 100 biggest accounting firms and cementing their dominance in the local market. They also increased headcounts across the board, bolstering staff numbers who were billed out to clients but not partners by about 26 per cent collectively, according to The Australian Financial Review Top 100 Accounting Firms list for 2022.
‘Couldn’t afford school fees’: Here’s the story of Punit Renjen, Deloitte CEO [Mint]
A twitter user Ravi Handa, spoke about Punit Renjen’s journey. In his thread, he said that Punit Renjen, had to drop out of a school as his parents could not afford the school fess and graduated from a college in Rohtak and went to Delhi to find a job after seeing an advertisement in newspaper. “Punit Renjen , now CEO of Deloitte, had to drop out of a school because his parents couldn’t afford the school fees. Graduated from a local college in Rohtak because it was cheap. Went to Delhi to find jobs based upon an advert for Usha that he saw in a newspaper,” he tweeted.
Can companies keep Gen Z and boomers happy? EY is working to perfect the formula [Employee Benefit News]
EY paid for this article, right? EY recently conducted a survey of 3,000 workers across enterprise organizations to understand just how those needs have changed, and to shine a light on generational preferences when it comes to workplace culture, benefits and values. Gen Z and millennials put a premium on corporate culture and a commitment to inclusion — 39% of both generations said culture has a “great impact” on whether or not they stay at an organization. Relatedly, 49% of that younger workforce said their loyalty to an organization is impacted by the company’s position on social values.
PwC beefs up consulting with latest tech deal [CFO Dive]
Accounting and consulting giant PricewaterhouseCoopers has agreed to acquire data-focused consulting firm Sagence, the fourth tech acquisition in 18 months for the company as it grows its consulting-services business. “A lot of clients are wrestling with big volumes of data from a lot of different places: Some of those are legacy old systems — they’re on premise — and some of them are on the cloud,” said Jenny Koehler, a strategic growth and business development leader at PwC. “Sagence has a continuum of professionals that can actually architect the optimal data structure … for the future.”
Audit
Audit Fees Rise Only 2.5%, But Audits Require Greater Effort [CFO]
Average fees for existing large accelerated and accelerated filers rose modestly by 1.8% and 2.3%, respectively, in 2021, according to the Financial Education & Research Foundation’s Public Company Audit Fee Study. About half of the financial executives surveyed said 2021 audits required greater effort to support than those in 2020. A majority said that was due to the expanded scope of their audits, but changes in organizational structure, divestitures, and economic uncertainty were also cited. Many auditors responding to the FERF study noted an increase in effort by their teams (68%). The auditors said changes to internal controls over financial reporting (ICFR) — not related to the transition to a hybrid working environment — were the main driver. Also cited were acquisitions and changes to issuer structure or business model.
India Launches Audit Inspections After Spate Of Scandals [Bloomberg Tax]
India’s accounting watchdog on Friday published new audit quality inspection guidelines, as the country’s regulators continue to clamp down after a flood of scandals. The National Financial Reporting Authority said that audit quality checks were “integral” to its work as an independent regulator. It will choose firms for inspection based on factors including their size and the risk of the work they do, it said, and it will publish any problems it finds.
Vatican’s former audit chief launches €9.3mn legal case over dismissal [Financial Times]
The Vatican’s former chief auditor and his deputy, who were dismissed in 2017 after trying to investigate the Catholic church’s “off the books” Swiss bank accounts, have launched a €9.3mn legal action against the Holy See. Libero Milone and his number two Ferruccio Panicco are claiming damages for lost earnings, emotional distress and loss of reputation over how they were forced from their jobs after being accused of misconduct. They were later publicly accused by then-powerful Cardinal Giovanni Angelo Becciu of spying on the private lives of their Holy See superiors, including Becciu himself.
Law and Order
Germany’s huge Wirecard fraud trial to start in December [AFP]
Wirecard’s former CEO Markus Braun will go on trial from December 8 to answer fraud charges in Germany’s biggest-ever accounting scandal, a Munich court said Wednesday. Austrian-born Braun, 53, stands accused of “commercial gang fraud”, embezzlement and market manipulation for his role in Wirecard’s spectacular collapse two years ago. The higher regional court in Munich said it had scheduled 100 court dates for the mammoth trial. Once the standard-bearer for the German tech industry, payments firm Wirecard was plunged into chaos in 2020 after admitting that 1.9 billion euros ($1.9 billion) missing from its balance sheets likely didn’t exist. The scandal was “unparallelled” in Germany’s post-war history, according to then finance minister Olaf Scholz, who is now chancellor.
Midtown Atlanta shooting: Suspect indicted on felony murder, aggravated assault charges [WSBTV]
An update on Ex-BDO IT Audit Manager Raissa Kengne: Fulton County court records show that Kengne was indicted Nov. 4 on the following charges: murder (two counts), felony murder (two counts), aggravated assault with a deadly weapon (five counts), false imprisonment, attempted burglary in the first degree and possession of a firearm during the commission of a felony (three counts).
Crypto
Meet the Metaverse Night Club–Loving Audit Firm That Presided Over FTX’s Financials [CoinDesk]
Crypto exchange FTX filed for Chapter 11 bankruptcy protection on Friday with an eleven-figure hole in its books. As observers remarked on the rapid deterioration of then-CEO Sam Bankman-Fried’s trading empire, a natural question emerged: Who was FTX’s auditor? FTX Trading LLC, the exchange’s international arm, worked with auditing firm Prager Metis, according to financial statements seen Friday by CoinDesk. The mid-sized firm lists 24 operating locations on its web site, including the “metaverse.” A page of Prager Metis’ website published in June said it also “proudly supports FTX US,” but at the time of writing that page has been taken down (the meta data is still live, however). The 2020 and 2021 FTX US audits were performed by New York City-based firm Armanino, according to documents viewed by CoinDesk.
Stripe, Deloitte, Sullivan & Cromwell Are Among 53 FTX Advisors, Vendors And Bankers Weathering Exchange’s Collapse [Forbes]
The firms with ties to FTX named in this Forbes piece: Prager Metis (current auditor), Armanino (former auditor), Deloitte, and PwC.
Staff Accounting Bulletin on Crypto Safeguarding Obligations is Not SEC Rule, Senior Official Says [Thomson Reuters]
SAB 121, which was issued at the end of March to better protect investors, describes how companies should account for custodial services of crypto assets. Because of risks unique to crypto, the staff determined that companies should record a liability and corresponding asset on their balance sheets at fair value. “A SAB is not a commission rulemaking; it is not an official pronouncement of the commission. It is—as the S in SAB implies—the views of the of the staff. It is not standard setting. That’s what the FASB does. So, what a SAB is intended is to communicate the staff’s view about the application of current GAAP to an existing fact pattern” in emerging issues, SEC Acting Chief Accountant Paul Munter said during a fireside chat at the Corporate Financial Reporting Insights Conference hosted by the Financial Executives International in New York on Nov. 7, 2022.
Accounting Firm M&A
National accounting firm acquires Lafayette-based PRM CPAs + Advisors [The Acadiana Advocate]
Weaver announced the transaction recently as a move that allows it to expand into Louisiana and its tax and accounting advisory practices, adding one partner and 11 other professionals to its team. “Weaver and PRM have had a strong working relationship for many years, and we could not be more pleased to have their firm join Weaver,” said John Mackel, Weaver CEO and Managing Partner. “PRM has a strong oil and gas practice in Texas and Louisiana as well as a robust high net worth tax practice, primarily focused on health care. PRM’s culture and values closely align with ours, making this an ideal fit.”
Scottsdale, Paradise Valley residents merge consulting and accounting firms [Daily Independent]
REDW LLC, which is led by Scottsdale resident Mike Allen and is one of the Southwest’s largest advisory and CPA firms, announced that tax and accounting firm Edwards, Largay, Mihaylo & Co., PLC has joined with REDW effective Oct. 31, increasing REDW’s local office to nearly 100 team members.
Clients Are the Worst
I’m reading this as you’re actually going to murder clients
— Lorilyn Wilson, CPA (@LorilynWilson) November 10, 2022
Friendly Reminders
How Ethical Accounting Protects Consumers and Encourages Growth [Bloomberg Law]
As gatekeepers of the financial market, certified public accountants are professionally obligated to provide investors with trustworthy and reliable information. Communities around the world rely on accountants to keep companies and governments honest through tax filings, audits, sustainability reporting, and fraud investigations, among many other services. Individuals also rely on CPAs for tax preparation, financial planning, and strategic advice. There will always be examples of individuals who fail to uphold these standards, highlighted by recent audit deficiencies and firm cheating scandals. But these cases are not the norm and reinforce why ethical standards are so important. They set clear expectations on what the profession stands for, enable stakeholders to hold bad actors accountable, and promote transparency within our financial ecosystem.
