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Friday Footnotes: Big 4 Pride; KPMG Gets Snubbed; EY Goes on a Poaching Spree | 6.3.22

a dog wearing a colorful feather boa

Accountant Finds Out Client Has “Skeletons In The Closet”, Gets The IRS Involved And Makes Him Lose Everything [Bored Panda] It was posted on Reddit so obviously it must be true.

How a New Accounting Rule Is Making Bank Earnings Go Wild [Wall Street Journal] The new accounting standard, known as current expected credit loss, or CECL, says that a bank has to set aside funds to offset loan losses that might come anytime in the future. That is a far broader calculation than the old rules, which were based on losses expected imminently. The rule is intended to create a clearer picture of bank risk by forcing banks to acknowledge potential problems earlier. The Financial Accounting Standards Board adopted CECL in 2016, prompted by criticism that banks had booked losses too slowly in the run-up to the 2008 financial crisis.

Class of 2022 grads entered a sizzling hot job market [The Daily Wildcat] A University of Arizona grad disses the House of Klynveld LOL: Nick Wilson, who received an accounting degree, said he spent “roughly six to eight weeks, with a lot of tedious time on Handshake and different firms’ websites” before getting a job offer from the public accounting firm KPMG. Wilson turned it down, though, and opted instead to pursue grad school. He said he would like to eventually become a Certified Public Accountant, which typically requires specific educational requirements beyond a bachelor’s degree in accounting.

Accountants well-positioned to capitalize on fintech [Accounting Today] Accountants are well-positioned to capitalize on the growing intersection between finance and technology, colloquially known as “fintech,” according to A recent report. The report, compiled by the Association of Chartered Certified Accountants, in cooperation with Chartered Accountants Australia and New Zealand, found that about half of some 5,700 poll respondents, the majority of which were accounting professionals, said they saw career opportunities for themselves in fintech, particularly those under the age of 55.

EY hires consultant to sort out feuding consultants [Australian Financial Review] Despite the aphorism of Latin origin, these days it is actually not recommended that physicians heal themselves. Nor consultants, it seems. Which must explain why EY has turned to … well, others, to resolve a tricky situation developing across its fast-growing cybersecurity consulting teams.

Abusive CRATs and Maltese IRAs among ‘Dirty Dozen’ tax scams [Journal of Accountancy] The IRS on Wednesday began its annual “Dirty Dozen” series, warning of abusive tax transactions and scams, with four schemes the Service advised taxpayers to shun. The four arrangements the IRS described as potentially abusive “are very much on our enforcement radar screen,” a news release quoted IRS Commissioner Charles Rettig as saying. The release also reminded taxpayers that they remain legally responsible if they adopt a promoter’s too-good-to-be-true arrangement and its promised but illusory tax savings. As for those promoters, the IRS warned that its Office of Promoter Investigations will detect and examine their activities.

Time to dust off the rainbow logos and Pride platitudes, y’all!

EY’s head of American operations is leaving at a tricky time for the organization [Fortune] Kelly Grier, head of EY’s U.S. business, is leaving the company on June 30, while the consulting firm is planning a potentially historic restructuring. Grier’s departure was announced in February, after she informed EY’s U.S. partnership that she wouldn’t seek reelection in October, the Financial Times said.

KPMG to scale back audit clients to boost standards [Accountancy Today] KPMG will reportedly scale back its audit operation in a bid to focus on improving standards as the firm has been hit by a series of fines over its audit failings in recent years, according to the Sunday Times. The news outlet said that the firm has already halted work for some of its clients and would now be “selective” about the work it competes for, according to Cath Burnet, head of UK audit for KPMG.

EY raids its big four rivals as it appoints 90 new partners [Australian Financial Review] EY has promoted 48 staff members to partner and brought another 42 partners into the firm during the financial year to bring the total partnership to 709.

US Audit Leader Warns Time to Reach China Deal Running Out [Bloomberg Tax] Although talks between regulators are ongoing, “time is of the essence for us to be able to reach an agreement,” Erica Williams, chair of the Public Company Accounting Oversight Board, said in remarks to a USC Marshall financial accounting conference Thursday. “Our team at the PCAOB is doing everything we can to try to advance that process.”

Plans to relax accounting rules for small UK firms ‘risks rise in economic crime’ [The Guardian] The government’s proposals will mean reviewing the definition of a micro-company, meaning more companies could be exempt from releasing detailed accounts. It will also consider the kind of reporting requirements for so-called public interest entities – which cover companies listed on the stock exchange, banks and building societies, and insurance firms – to try to attract high-growth firms.

Photo by Rosemary Ketchum