Is it time for firms to transform their business model? [Journal of Accountancy]
Pandemic pressures have worn the workforce thin, and the economy is in the thick of rapid, radical change. It’s time for firm leaders to ensure their businesses are on course to not just survive but thrive. Many practitioners in public accounting are feeling burned out. They have been in crisis mode instead of being strategic about where they are going. This was necessary to help clients get through the pandemic, but now firms need to recognize how changes caused by COVID-19 — most notably the technology-fueled explosion of remote work and a talent shortage in many firms — have transformed the workforce and firm-client interactions.
How to transform a disengaged accounting team [Thomson Reuters]
Whether it is due to in-office employees desiring greater flexibility and work/life balance, remote staff feeling isolated and disconnected from the team, or employees, regardless of their location, simply feeling overworked and stressed, workplace engagement is a critical issue that leads to higher turnover rates. This article will explore how firms can transform a disengaged team and provide actionable insights firm leaders can set in motion today.
Ex-BDO USA Workers Advance Narrowed 401(k) Plan Fee Challenge [Bloomberg Law]
Former BDO USA LLP employees who accused the accounting firm of mismanaging their $1.2 billion 401(k) plan advanced part of their proposed class action. The workers have viable ERISA claims based on BDO’s alleged failure to obtain the cheapest available share classes for certain plan investments, the US District Court for the Northern District of Illinois ruled Tuesday.
CLA, 8th Largest U.S. Accounting Firm, Sees 15% Growth On Way to $2 Billion [GlobeNewswire]
*makes jerkoff motion*
Accounting Today recently named CLA (CliftonLarsonAllen LLP) to its 2023 Top 100 Firms List. CLA ranked number eight, marking the sixth consecutive year the firm has been recognized and ranked at that level. CLA’s CEO Jen Leary shared: “As an organization, we care deeply about building a culture that’s a competitive advantage so we can provide the most impactful services for our clients. Our GenX leadership team is so grateful to the giants of the industry that came before us, laying the foundation for our success. Today we are executing on our Future Forward strategy and seeing results even faster than we expected.”
Armanino Expands Entertainment Expertise with the Addition of Blue Sky Group and Royalty Compliance Organization [Business Wire]
Armanino’s Business Management team, which serves some of the leading musicians, entertainers and music publishers among other clientele out of their New York City and Los Angeles offices, will now have an office in Nashville. Music City is the country’s fastest growing entertainment hotspot and an office in Nashville gives Armanino’s team and its clients the trifecta of office locations to serve the entertainment industry.
The IRS plans to tax some NFTs as collectibles — and the rich would pay up to 28% on profits [CNBC]
The IRS said it plans to tax some non-fungible tokens, or NFTs, as collectibles akin to art or gems — an approach that would tax profits for wealthy owners at a higher rate relative to assets such as stocks, real estate and cryptocurrency. The federal government levies taxes on collectibles held for more than a year at a top rate of 28%. It generally levies a top 20% rate on other investments. In a notice on Monday, the IRS said it intends to issue guidance regarding the treatment of certain NFTs as collectibles.
H&R Block accuses White Plains CPA of double-dip dealings [Westfair Online]
The 2023 tax season is well underway, H&R Block says, so “time is of the essence” to stop a former White Plains office manager from competing for customers. H&R Block sued Danny W. Stanton on March 20 in U.S. District Court, White Plains, seeking an order to ban him from using its trade secrets or providing tax and bookkeeping services to its clients. “Stanton’s scheme,” H&R Block alleges, “constituted a classic example of double-dipping.” He allegedly received a salary and support services from the tax preparation giant while diverting clients to his own business. Stanton was licensed as a certified public accountant in New York in 1988 and had previously run his own firm.
As Problems in Global Audit Persist, SEC Chief Accountant Reminds Lead Auditors of their Responsibilities [Thomson Reuters]
Securities and Exchange Commission Chief Accountant Paul Munter urged lead auditors to do a better job when other accounting firms and accountants participate in the audit because the staff has continued to observe shortcomings. In a March 17, 2023, statement, he pointed to the Public Company Accounting Oversight Board (PCAOB) disciplinary actions against auditors last year as well as SEC staff observations, which “highlight troubling instances where the lead auditor used audit work performed by another, affiliated audit firm that played a ‘substantial role’ in the audit, yet was not registered with the PCAOB.”
EY, KPMG and the fallout of two accounting scandals [Financial Times Opinion]
It is not just shareholders that have become ever more cautious in the wake of one of Europe’s largest accounting scandals. Auditors have done so too. This has become a problem for German real estate company Adler Group as it battles waning investor sentiment in the wake of a short seller attack in October 2021. Adler, ditched by its auditor KPMG last year after the Big Four firm issued a disclaimer opinion for the 2021 results, has so far been unsuccessful in its search for a replacement. The uncertainty has contributed to a 92 per cent drop in the company’s share price over the past year.
This is the interview question Deloitte’s head of talent asks candidates to find out what’s most important to them [Fortune]
In an interview with Insider, Rizzo revealed his favorite interview question: “If you can highlight only one bullet, accomplishment, or activity on your résumé, what is it and why?” “This question tells us a lot about what’s important to the candidate,” he said.
From that one query, hiring managers can find out what a prospective new hire is most passionate about, what they’ve accomplished and how that reflects their strengths, as well as where their purpose and values lie. “I like this as an opening question because it allows the candidate to signal how they want to be known and remembered,” Rizzo added.
Deloitte inks one million square feet of office lease in Bangalore [The Economic Times]
Deloitte has inked deals with Prestige Group and Salarpuria to secure three office spaces spanning 1 million sq ft in a bid to bolster its operations in Bengaluru. Deloitte has hired nearly 50,000 professionals over the last three years, nearly doubling its headcount in India.
PwC and Labor to mend bridges at budget fundraiser [Australian Financial Review]
If you thought the federal government’s recent disgruntlement with PwC would spell the end of the consultancy’s central role in the fundraising that takes place around the May budget, you’d be entirely wrong. PwC has for years hosted lavish fundraising shindigs for the government on budget night, until recently in parliament’s Great Hall, giving some 400 senior business figures a chance to mingle with ministers shortly after the year’s most significant political set-piece. An equal opportunity political benefactor, PwC has done the same for the opposition (whoever it happens to be) following its budget reply speech. Recent unpleasantness aside, that isn’t changing. On Tuesday, May 9, the Federal Labor Business Forum has again invited select guests to the $5000-a-head federal budget dinner, hosted by PwC.
EY’s U.S. Auditors Are Demanding Concessions in Split [Wall Street Journal]
Ernst & Young’s renegade U.S. auditors are demanding that the firm examine the financial health of its potential offspring as they block a breakup of the global accounting firm. Julie Boland, EY’s U.S. chair and managing partner, called for rethinking the split, which has been in the works for more than a year. The U.S. audit partners want a bigger piece of the firm’s lucrative tax business. “The questions we need to resolve affect the capabilities and financial strength of both businesses,” said Ms. Boland, who was tapped to lead the global auditing business after the breakup. Ms. Boland two weeks ago sent shock waves through the Big Four firm by announcing a pause to the plan to split its auditing and consulting arms. The call for a rethink by EY’s U.S. arm has created a rift between the U.S., the firm’s largest business, and the rest of the world. Ms. Boland rejected suggestions that a few people on her executive committee were upending a blueprint supported by most of EY’s 13,000 partners. “There’s different points of view,” she said. “This is incredibly complex. People are asking the right questions, and we’re making sure we’re getting those questions answered.”
Accounting-Fraud Indicator Signals Coming Economic Trouble [Wall Street Journal]
Manipulation of earnings from Corporate America is on the rise, an ominous omen for the U.S. economy. That is the conclusion of new research on accounting fraud, using a technique that flagged Enron as an earnings manipulator several years before the energy company’s spectacular 2001 implosion. Unless you study accounting, you have likely never come across the M-Score, which is the number underlying both the Enron episode and the economywide concern now. The “M” is for manipulation, and uses a company’s financial statements to determine whether it is engaging in manipulation. Since the 1990s, the metric has been used to identify red flags at individual companies. Now Messod D. Beneish, a professor of accounting at Indiana University who developed the M-Score in the 1990s, and several co-authors have calculated an aggregate score for nearly 2,000 companies. It shows a disturbing pattern in the historical data: The probability of manipulation usually rises rapidly in the quarters before the economy tips into recession.
U.S. Accounting Board Seeks Crypto Standards Requiring Firms to Report Price Shifts [CoinDesk]
U.S. accounting standards may be overhauled to specifically factor in crypto accounting, establishing a fair-value approach that would demand certain digital assets be measured at what they would go for in the markets, according to a change proposed this week by the Financial Accounting Standards Board. That’s a departure from the status quo, which marks only unrealized losses and has been seen by the industry as a barrier to crypto adoption.
Adaptability Is Key for Small Businesses as They Navigate the Accountant Shortage [Capterra]
Capterra’s 2023 Accounting Shortage Survey* of 297 business leaders found that 64% of organizations are struggling to find outside accounting firms that can support them. And to avoid delaying accounting tasks, more than half have adopted software.