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
Why Graduates Aren’t Hot on Accounting Careers: Low Starting Pay, Onerous Testing [Wall Street Journal]
For Connor Verrett, an economics major and entrepreneurship minor at Washington & Lee University who expects to graduate this month, that roadblock was among the factors he considered in eschewing an accounting career. “It just seems like a lot of studying for a year for a big test,” the 21-year-old Mr. Verrett said. He will be starting as an investment-banking analyst for the technology, media and communications team in New York City at Lincoln International this summer. In deciding his major, Mr. Verrett said he relied on advice from his track teammates, many of whom went into investment banking or consulting. “Working in the Big Four seems to be more limited to just like, CFO or chief finance type roles.” Investment banking was more versatile, he said. “Optionality for different careers later on was probably the No. 1 thing,” Mr. Verrett said of the deciding factor for choosing his major.
UK accounting sector needs to put more emphasis on its people [AccountancyAge]
Across the UK, increasing turnover rates have been observed across barrios sectors. The accountancy sector is no exception. According to Accountancy Age’s latest 50+50 report, in 2022, the average staff attrition rate rose to 17.89% across the sector, compared to 14.69% in 2021. The decrease is minimal, but firms cannot afford to be losing additional staff while applicants for new positions are down. Competition has been the biggest factor over the last 12 months,” Chloe Alexander, head of HR for Larking Gowen, explained to Accountancy Age. “It is a candidate-driven market which is moving at pace. As a firm we have had to be proactive in our response to attracting candidates, addressing workforce planning and aligning our recruitment strategy to reflect this.”
Colorado Springs accounting firm to open Denver office [Denver Business Journal]
Stockman Kast Ryan and Co., a public accounting firm that services businesses and individuals, plans to open a 4,200-square-foot office near the Landmark shopping center in July, said Ann Koenigsman, a tax partner who is heading up the opening of the Denver location. Despite a nationwide accountant shortage and a challenging labor market, Koenigsman said the firm doesn’t expect to have too much trouble finding talent. Much of that confidence stems from having a full-time recruiter and a robust internship program. In recent history, she said the firm has hired interns from five different universities.
Anyone wanna help this person out with some advice?
Fired: job search or CPA exam?
by u/OrganicAd5804 in Accounting
Big 4
PwC scandal will be referred to national anti-corruption watchdog [The Age]
On Thursday, Treasury confirmed that it was deciding whether to refer the matter to the Australian Federal Police in light of damning evidence of misconduct that was made public last week. “Treasury is further considering the Commonwealth’s position on this matter given the new material released by the TPB [Tax Practitioners Board],” a spokeswoman said. Former NSW Supreme Court justice Anthony Whealy, KC, now the chair of the Centre for Public Integrity, said the federal anti-corruption legislation could catch government contractors, such as PwC, and operated retrospectively.
China’s Shift Away From Big Four Auditors Has EY Most Exposed [Bloomberg]
Among the four biggest global accounting firms, Ernst & Young is likely to be the most exposed to Beijing’s crackdown on US-linked auditors, as it stands to lose about a 10th of its China revenue. The Asian country recently urged state-owned enterprises to phase out Big Four contracts and hire locally instead in a bid to rein in foreign accountants amid what it called data security concerns. For now, the guidance applies to only central SOEs, and it’s unclear whether province-level SOEs and private companies will be included later. In 2021, the Big Four audited a quarter of China’s 98 central SOEs, but EY led the pack earning about 12% of its revenue in the country from these giant corporations. KPMG, PwC and Deloitte got less than 4% each, according to data from the Chinese Institute of Certified Public Accountants analyzed by Bloomberg.
Is AI going to replace me? [Cap Times Opinion]
A Washington Post online column earlier this week invited readers to type in their occupation and it would tell you how it could be affected by that big train roaring down the tracks: artificial intelligence. The bottom line: Highly skilled, highly educated white-collar occupations, ranging from architects to astronomers to judges, are most likely to see change as a result of the development of artificial intelligence. That doesn’t mean the jobs will go away, not by a long shot. But a lot of people in white-collar jobs will undergo big changes at their workplace, while indeed some jobs will disappear thanks to AI.
PwC, Microsoft and Icertis launch strategic collaboration to accelerate enterprise digital transformation with AI-powered contract intelligence [PwC]
The new collaboration builds on the strength of existing relationships Microsoft has with both PwC and Icertis. It offers a contract intelligence platform that provides C-suites with the ability to unlock critical business insights from data embedded in contracts and use it to automate end-to-end business processes. As a result, C-suites will realise significant cost savings and reduced revenue leakage, more visibility into the delivery of ESG commitments, better compliance and risk management, and greater transparency.
Firm Watch
Fortune 100 Best Companies to Work For (2023) [Fortune]
How the ranking shook out:
@PlanteMoran beat Deloitte (17), PwC (30), KPMG (38), and EY (50) to rank 16 on Fortune’s 100 Best Companies to Work For list for 2023 pic.twitter.com/Xjwllnd7GA
— Going Concern (@going_concern) May 10, 2023
EisnerAmper Launches New Website [EisnerAmper]
“We set out to create a sleek, flexible website that offers an easily navigable, singular information resource” said Michael Mattia, EisnerAmper Partner-in-Charge of Marketing. “I think we’ve succeeded, and I’m thrilled to introduce this new website to the world.”
BPM amplifies Risk Advisory practice with strategic hire [PR Newswire]
BPM LLP, one of the top 40 largest public accounting and advisory firms in the country, announced the addition of a strategic hire in its Risk Advisory practice. Veteran cybersecurity and risk management professional Fred Rica has joined as a Partner of the Firm. He brings decades of experience in cybersecurity and risk management across a broad range of sectors and industries.
Baker Tilly Partner to Lead Private Company Accounting Panel [Bloomberg Tax]
Baker Tilly Managing Partner Jere G. Shawver will serve as the new chair of the Financial Accounting Standards Board panel devoted to private company accounting concerns, FASB’s parent organization announced Friday. Shawver, who is responsible for Baker Tilly’s assurance practice and risk management, will begin his three-year term leading FASB’s Private Company Council on Jan. 1, 2024, the Financial Accounting Foundation said.
Deloitte, BDO lease office towers of the future [Sydney Morning Herald]
Deloitte Australia will take up a 10-year lease over 27,800 square metres of the newly rebuilt tower at 50 Bridge Street, including the top floor that has the reception area, function rooms and an outdoor balcony. The firm is relocating from Grosvenor Place. BDO, another global accounting, tax and advisory services firm, has also upgraded its space in the new “flight to quality” era of leasing, with 6100 square metres across levels 22 to 25 of Parkline Place on the corner of Pitt and Park streets. The head of property at Investa, Michael Cook, said the deals signal that the often-mentioned “flight to quality is well and truly driving the Sydney commercial office leasing market”. “In a competitive leasing market, BDO was committed to securing a building that provided their people with new market-leading facilities in a state-of-the art building, in a central location, with the convenience of unrivalled multi-transport connections,” Cook said.
Rehmann Welcomes Charles Story as Director of Operations for Corporate Investigative Services [PR Newswire]
Rehmann, a fully integrated professional advisory firm, is pleased to announce the appointment of Charles (Chuck) Story as Director of Operations for Corporate Investigative Services. Chuck will be taking over from Bill Kowalski, a 14-year Rehmann veteran who announced his retirement in March and will be staying on through the end of the year to aid in Chuck’s transition. Boasting 20 years with the FBI, Chuck most recently held the position of Supervisory Senior Resident Agent of the Detroit Division, Flint Resident Agency (FLRA), where he led and supervised investigations into gang and violent crime, financial and healthcare fraud, violent crimes against children, and domestic and international terrorism.
Schellman Launches ESG Assurance Practice [INSIDE Public Accounting]
Tampa, Fla.-based IPA 100 firm Schellman of (FY21 net revenue of $101.9 million) has brought on Tom Andresen Gosselin as a practice director to lead its newly launched ESG assurance practice.
Audit
How the Wirecard Case Has Impacted the German Audit Market [Bloomberg Tax]
Klaus-Peter Naumann of the Institute of Public Auditors in Germany outlines how the Wirecard case involving EY is changing the audit market, triggering a new law impacting corporate governance, auditing, and enforcement.
UK watchdog probes Deloitte audit of UK clothing retailer Joules [Reuters]
Technology
MIT research on ChatGPT shows ‘Industrial Revolution-level large’ leap for workers, says AI CEO [CNBC]
“What we’re hearing from customers using our API for legal companies is that it is totally transforming the way they work and the efficiency that any one lawyer can achieve and the accuracy, freeing people up to do more of what they do really well, and having this new tool to sort of give them as much leverage as possible,” OpenAI CEO Sam Altman said. That backs up what tech executives working directly with legal firms have previously told CNBC, with one saying of his legal and accounting firm clients that the sentiment right now is not that AI replaces lawyers, but “lawyers using AI are gonna replace lawyers. … Those professionals are going to be more effective, more efficient, they’ll be able to do more,” he said. “That is a pattern we’re seeing again and again in many industries, and I’m super excited about it,” Altman said. “I do think it will touch almost everything.”
#NEW: Chairman @PatrickMcHenry announces a Digital Assets, Financial Technology and Inclusion Subcommittee hearing to assess how legislation will help put the ‘stable’ in stablecoins.
Read more 🔗https://t.co/tbh9bADnen
— Financial Services GOP (@FinancialCmte) May 11, 2023
Meta wheels out Deloitte to plug the metaverse. Is anyone actually convinced? [The Register]
To make the case for the economic bounty of the metaverse, Meta cites a study “commissioned by Meta and produced by Deloitte.” And guess what? The study Meta paid for finds that the social network is on to something – in as non-committal a way as possible. There is a disclaimer about the third-party data cited in the report: “Deloitte has neither sought to corroborate this information nor to review its overall reasonableness.” But hey, who among us hasn’t issued a report we won’t stand behind? Just because Deloitte insists “no information in the Final Report should be relied upon in any way by any third party” doesn’t mean we can’t be blindly enthusiastic about investing in the metaverse. Where’s your sense of adventure?
Other News
LR5 school district drops accounting firm behind controversial audit [The State]
Some juicy drama going down in South Carolina this week.
The Lexington-Richland 5 school district has ended its relationship with an accounting firm that critically scrutinized the district’s spending even as it stoked controversy and pushback from some of its detractors. School board members voted 5-2 on Monday to give Jaramillo Accounting Group a 30-day notice of the end of its auditing contract with the Chapin-Irmo area district. At least one board member cited the controversy around JAG as a reason to end the contract. “I believe it’s time for us to move on and turn the page on our auditing contractor,” Kevin Scully said, saying the district’s chief financial officer needs “a fresh start to work with an auditing firm they have full confidence in.” “But there are other reasons,” Scully said, including that “JAG is listed as a co-defendant in a lawsuit with the district and that is a game changer.”
‘Terrible record-keeping’: This town wants to know how it spent millions of dollars [SunSentinel]
Florida Man City burned through a couple million dollars and doesn’t know on what.
How does a city plow through millions of dollars and not know how? The town of Pembroke Park said it needs to find out, and commissioners will be asked to approve a six-figure contract with a forensic accounting firm as early as this month. Town officials said they took out a $2.3 million loan from the federal U.S. Department of Agriculture in January 2009 for “the acquisition, construction and erection of extensions and improvements to the sewer system.” But somehow the details of how much was spent on what specific project, if any at all, got lost over the years. It was forgotten about until November 2021 when the USDA demanded a final payment of $2,012,000 to close out the loan when the town realized it didn’t have answers. At an interest rate of 4.3750, the town paid a total of $3,591,997.
