Comments are closed on Friday Footnotes and the Monday Morning Accounting News Brief by default. If you have something to say about any stories linked here you are welcome to email the editor, text us at 202-505-8885, or hit us up on Twitter @going_concern. See ya.
Private Equity
How the Changing Firm Environment May Impact Accounting Education [CPA Journal]
Many private-equity firms (PEF) have invested capital in larger accounting firms to facilitate the purchase of “technology and talent” (M. Mauer, “Blackstone Buying Stake in Accounting Firm Citrin Cooperman,” Wall Street Journal, Jan. 7, 2025). These expenditures likely include artificial intelligence (AI) software, hardware, and training costs. Depending on the level of control acquired and the expectations for a return on capital, PEFs could spur CPA firms to increase their efficiency, perhaps through reduced over-all hiring and more technology-focused recruiting. These actions could cause larger firms to parallel the Big Four’s movement to implement AI and change their recruiting and retention strategies.
Big 4
KPMG’s new CEO joined as an intern 33 years ago. Now he wants to lure Gen Z back with a new office outfitted with moody lounges and a barista bar [Fortune]
When Timothy Walsh walked into KPMG for the first time 33 years ago, he was handed a stack of loan files and sent straight to a copy machine. The new intern spent his first week feeding paper into the copier at a New Jersey bank, the monotonous work that now seems worlds away from the gleaming glass headquarters he leads today. “It’s funny,” Walsh said in an interview with Fortune. “I stood at that copy machine all week making copies of loan files for audit evidence. When I look at what our people do today—and the kind of skills they bring—it’s completely transformed.”
Deloitte Employee Sues Alleging Assault by Boss, Biased Firing [Bloomberg Law]
Deloitte & Touche LLP and a former senior manager are accused in a federal lawsuit of subjecting an associate to sexual harassment, including assault, and firing for reporting the abuse. Scott Wilson lured Melanie DeCanio into a restaurant restroom during a team outing in Annapolis, Md., the suit filed Thursday in the US District Court for the Eastern District of Virginia says. He tried to kiss her and only relented because she repeatedly protested and reminded him of his wife and new baby.
KPMG axes ‘busy season’ overtime pay for junior auditors [Financial Times]
KPMG has axed overtime pay for its junior auditors in the UK as the Big Four accounting firm seeks to reduce “busy season” hours and keep costs low amid industry-wide slow revenue growth. One junior auditor said: “Everyone’s upset with it. A lot of the cohort don’t really see how anybody’s meant to be incentivised to stay long term, nor do we foresee where the future partners are going to come from.”
Deloitte Resigns as Auditor of Firm that Sold Stenn Notes [Bloomberg Tax]
Deloitte has resigned as the auditor of a firm that issued hundreds of millions of dollars of trade-finance notes that were allegedly backed by sham transactions. The accounting firm is unable to complete the 2024 audit for a special purpose vehicle tied to Stenn Technologies, which collapsed into UK insolvency in December, according to a filing Wednesday.
Firm Watch
BDO nears merger of UK and Irish firms [Financial Times]
The two firms are concluding discussions but are still awaiting a partner vote and regulatory approval. The business would have annual revenues close to £1.1bn and combine the Irish offices in Dublin and Limerick with the UK firm’s 18 sites.
AI
EY staff are using AI to tell them how AI is going to change their jobs [Business Insider]
That headline feels like a joke but they’re completely serious.
The Big Four firm has developed a training program, known as AI Now 2.0, that acts as a “thought partner” to help its employees foresee how their roles will evolve as a result of AI, Simon Brown, global learning and development leader at EY, told Business Insider in an interview. Staff answer a series of questions about their job, day-to-day responsibilities, and overall deliverables, then upload the answers to EYQ, the firm’s internal Chat GPT-like tool. EYQ then generates an analysis of how their current role might change because of the impact of AI, and helps them identify the skills, knowledge, and abilities they might need in the future.
Nearly half of UK accountancy firms plan £100K AI investments next year [AccountancyAge]
83% of senior decision-makers now say AI fluency and working effectively with AI tools are more important than traditional technical expertise. This is a profound move away from knowledge-centric roles. 46% expect many current core skills to become less relevant, while nearly a quarter (23%) predict a complete transformation of the accountant’s skillset.
Asian banks adopt AI in cyberfraud ‘pure arms race’, but criminals are faster [South China Morning Post]
AI is now central to how lenders monitor transactions, screen sanctions and verify customers, helping them flag suspicious activity faster. Yet experts say the systems remain limited by what data they are trained on and by how quickly criminals adapt.
