Friday Footnotes: Deloitte’s Naughty Workpapers; Audit Reform Critics; Clients Getting Dropped Like Mics | 3.4.22

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Deloitte considers Russia pull out as pressure grows on western firms to exit [Financial News] Deloitte is considering pulling out of Russia, becoming the first Big Four audit firm to do so as pressure grows on Western companies to cut ties with the country following its invasion of Ukraine. The firm is reviewing its “business and presence in Russia” according to a 2 March statement. Fellow audit firm Grant Thornton said on 1 March that it had ended links with FBK — its member firm in Russia — with immediate effect.

PwC, Deloitte and EY condemn Russia, KPMG stops short as rivals drop clients [Financial News] And more from FN on pull outs: Big Four bosses sought to condemn the Russia invasion of Ukraine as the industry weighs its response to events in a region that has historically yielded lucrative consulting clients. “We deplore the violation of international law and the Russian aggression against Ukraine. We stand with the Ukrainian people,” PwC said in a 28 February statement. “We unequivocally deplore Russia’s military invasion of the country and its absolute disregard for Ukraine’s sovereignty and independence,” said Richard Houston, chief executive of Deloitte North & South Europe in a 28 February LinkedIn post.

Pandemic has exacerbated tax-season anxiety, accountant says [Global News] No shit? TIL. Mike McLenehan told 680 CJOB that the COVID-19 pandemic has added to tax season stress for many, as more people are working from home than ever before and trying to navigate the process — which may have included skipping meeting with tax experts due to pandemic safety concerns.

Meanwhile on Twitter, our friend Sam Antar is still roasting the KPMG auditors (well, technically Peat Marwick) who let the Crazy Eddie fraud slip through their horny little fingers:

Decades of Neglect Leave I.R.S. in Tax Season ‘Chaos’ [New York Times] At the Internal Revenue Service’s sprawling Kansas City, Mo., processing center, teams of clerks earning $15 per hour work through the night, trying to help the agency clear a backlog of more than 20 million tax returns that are a year overdue. The conditions are subpar: Scanners sputter, forcing workers to enter data by hand, staplers are scarce and piles of tax documents overflow from carts. “The general theme for the time I’ve been there has been chaos,” said Shawn Gunn, a clerk in the receipt and operations group at the I.R.S. who started working at the facility in Kansas City last June and is transitioning to become a tax examiner.

KPMG Canada Follows Bitcoin Buy With Purchase of World of Women NFT [CoinDesk] The Canadian branch of KPMG has purchased a non-fungible token (NFT) from the World of Women collection, marking the global accounting firm’s foray into digital collectibles, the company announced Monday. The NFT, Woman #2681, was purchased on Feb. 13 for 25 ETH before being transferred to a separate wallet, a spokesperson told CoinDesk via email. The company also revealed it owns kpmgca.eth, the Ethereum Name Service (ENS) domain name meant for making wallet addresses easier to use.

SEC Chief Accountant Lauds FASB for Engaging Investors, Stakeholders on Potential New Standards [JD Supra] Paul Munter, acting chief accountant for the SEC’s Office of the Chief Accountant, on Feb. 22, 2022, released a statement related to the Financial Accounting Standards Board’s (FASB) effort to consult with investors and stakeholders when developing new accounting standards. In general, Munter praised the FASB’s efforts to engage with financial statement users with the goal of producing the best possible standards for improving the accuracy and effectiveness of financial reporting.

On Reddit this week, the quitting will continue until morale improves:

PwC’s Tim Ryan Tapped to Lead CAQ Governing Board [CPA Practice Advisor] Tim Ryan, US Senior Partner and Chair, PwC, has been elected Chair of the Center for Audit Quality’s (CAQ) Governing Board, effective February 28, 2022.

EY and Deloitte called to account by watchdog [The Times] Meanwhile, in Ireland: KPMG and PwC have been awarded top grades after a review of six sample audits by each firm, which is to be published by the accounting watchdog this week. EY and Deloitte fared less well, with improvements required in at least one of the six audits sampled for each firm by the Irish Auditing & Accounting Supervisory Authority (IAASA).

Employers added 678K jobs in February, but lost 800 in accounting [Accounting Today] Employment rose by 678,000 in February, the U.S. Bureau of Labor Statistics reported Friday, although the number of accounting and bookkeeping jobs declined by 800.

Accounting Firms Need New Tactics to Navigate Around the Pandemic’s Impact on the Workforce [CPA Practice Advisor] If firms are to recover and emerge stronger post-pandemic, they are going to need a new approach to address employee turnover and labor shortages. If you’re looking to navigate this new landscape, consider three approaches to address workforce woes.

Sector Insights: Audit reform delay [AccountancyAge] With the prospect of watered-down audit reforms failing to improve audit quality drawing significant criticism, Accountancy Age consulted some key industry voices on the current state of play, and what the final reform package should look like.

AICPA & CIMA stand with the people of Ukraine [Journal of Accountancy] The Association of International Certified Professional Accountants, the combined voice of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA), wholeheartedly stands with the people of Ukraine and supports governments in implementing economic and trade sanctions and other measures taken in response to the Russian military invasion.

Canadian audit regulator dings two of the Big Four accounting firms [The Globe & Mail] Deloitte implemented a system in 2016 that it believed eliminated employees’ abilities to manually change these “sign-off” dates, but when it realized they could manipulate their computer settings, they failed to issue guidance telling them not to. Often, CPAB says, a Deloitte audit staffer ran a Deloitte software program to detect work papers with missing sign-offs or inconsistencies, and then directed other Deloitte staffers, including partners, to insert missing sign-offs and backdate them.

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