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.
Battle accountancy firm urges others to offer opportunities to Ukrainian professionals after successful placement [SussexWorld via Yahoo!]
Alternate hed: Woman flees war-torn Ukraine only to be put to work at an accounting firm
Challenges with speaking English mean many refugees struggle to find work in the professions they have trained in and can only find employment where language skills are not as vital, such as cleaning, Roy Holland, Partner at Holland Harper, was approached by a friend who is hosting Olha Nosan from Odesa to ask whether he could offer her any work. Olha is a trained accountant who fled Ukraine with her 13-year-old daughter after the war started. Olha demonstrated her skills to Roy and is now working two days a week at the firm helping prepare accounts and doing anything else that is required. “I only spoke one or two words of English when I arrived, but I’m working hard to improve by going to college and having a tutor. I am really enjoying my work at Holland Harper and have some very nice colleagues,” she said.
PCAOB Launches New Online Tools to Help Users Find and Compare Inspection Report Data [PCAOB]
The Public Company Accounting Oversight Board (PCAOB) Wednesday unveiled an array of website transparency enhancements that allow investors, audit committee members, and other stakeholders to better access and understand data from PCAOB inspection reports. Six new search filters, including Part I.A deficiency rate, are now live on the PCAOB’s Firm Inspection Reports page to help users analyze and compare more than 3,700 inspection reports. “PCAOB inspection reports provide investors, audit committees, and potential clients with important information they can use to make informed decisions. By making that information easier to find and compare, these new tools will empower users to hold firms accountable for producing high-quality audits,” said PCAOB Chair Erica Y. Williams. Previously, visitors to the PCAOB website could only search inspection reports by four filters: firm name, country/geography, year when a report was published (i.e., approved by the Board), and whether a report includes public quality control criticisms.
Miami Heat’s Duncan Robinson Jokingly Says He Has A New Job As An Accountant [Sports Illustrated]
Miami Heat forward Duncan Robinson was recently seen on the street having some fun with a content creator who asked him what he does for a living. When approached, a friend of Robinson’s said, “Accountant.” Then Robinson agreed. In the video, he then compared Robinson to former Heat center Kelly Olynyk, who also jokingly told the creator he was an accountant earlier this year. Robinson and the creator set off on some sarcastic conversation. The creator asked, “What’s the best part of your job as an accountant?” He responded, ‘I’m a big numbers guy,” which conveniently makes sense as Robinson signed a five-year, $90 million contract extension with the Heat. Robinson concluded his sarcastic remarks after being asked how much he makes in a year, to which he responded, “about 100 grand.”
Spokane Accountant Charged With 46 Counts of Embezzlement [KFLD]
US Eastern District Attorney Vanessa R. Waldref said between 2020 and 2023, 25-year-old Carol Casilla of Spokane worked for Spokane Dermatology Clinic (SDC) as an accountant, during which time she allegedly stole over $715,000 via fraud. The charges claim Casilla wrote checks to herself and did numerous electronic fund transfers into her account. She even created a fictitious company so the outgoing money appeared to be for legitimate expenses.
Shitposting on r/accounting has been so out of control in recent weeks one user compared it to the downfall of Going Concern. Thanks to that user for acknowledging there was once a time we were funny.
TD Ameritrade, Ernst & Young, PWC MOVEit negotiations fail, data published [Cybernews]
The Cl0p ransomware gang is offering more than 3TB of sensitive data for sale – allegedly stolen from TD Ameritrade and Ernst & Young in the MOVEit zero-day attacks – all as retaliation for the companies’ lack of negotiation skills. Pricewaterhouse Coopers was also slammed by the gang after it was assigned its very own leak URL containing all of PwC’s published files. Ryan McConechy, CTO at cybersecurity service provider Barrier Networks pointed out that oftentimes it is a no-win situation for ransomware victims. “This is a worrying update for Ernst & Young and TD Ameritrade and clearly a situation both companies wanted to avoid. However, the incident does show that when it comes to negotiating with ransomware criminals, there is no winning,” McConechy said. “You are completely at their mercy and unless you do exactly as they request, they will act ruthlessly and try to shame you publicly, “ the explained.
KPMG Rolls Out Generative AI to Tax Pros, Launches Audit Pilot [Bloomberg Tax]
Inside KPMG, its tax professionals are leaning on generative artificial intelligence to help corporate tax departments prepare for new requirements to disclose their tax obligations by country. Its clients have been given access to that “virtual assistant” for help gathering tax data and guiding them through the analysis and drafting of reports on what taxes were owed around the globe. Those are just a few ways that KPMG’s $2 billion commitment already is integrating the next level AI into everyday business. The firm, leveraging its more than decade-long partnership with Microsoft, is tapping the tech giant’s Azure cloud platform and OpenAI, the creator of ChatGPT, to help its accountants and consultants provide faster insights. KPMG has said it would co-develop cloud and AI-based products for its employees and its clients—a five-year investment that the firm projects could return as much as $12 billion in revenue.
Forvis exec in Charlotte on accounting firm’s post-merger milestones and what comes next [Charlotte Business Journal]
Forvis, whose name combines the words “forward” and “vision,” is the Charlotte area’s sixth-largest accounting firm. The combined company had about $1.4 billion in revenue last June, and it expects double-digit growth this year. Through the merger, Forvis has been better positioned to take on new employees and industries that BKD and DHG did not have as standalone companies. And Giddens said the firm’s fresh name and brand have attracted a wider variety of talent for the organization. “There were some things that legacy BKD did that legacy DHG did not do as much,” Giddens said. “Those things revolve around higher education practices and private client services. And vice versa, there were some things that DHG did that BKD did not do as well — things like serving … that Fortune 1000 space. So now, having both sides of the Mississippi River offering new service offerings has just really jump-started our ability to continue to hire individuals.” Forvis has added more than 500 employees to its team since the merger, for a total of about 6,000 members companywide. It has just over 500 employees based at its two Charlotte offices in SouthPark and uptown. Both locations are undergoing renovations to reflect the new brand. Giddens said the company is focused on maintaining a hybrid work model to provide flexibility for its employees.
Grant Thornton Dinged for Audit Supervision Failures in Review [Bloomberg Tax (paywall)]
Grant Thornton LLP partners missed audit shortfalls in areas involving fraud and other significant risks for engagements they ran, according to new details included in an extended version of the firm’s 2018 regulatory review. The US accounting firm didn’t address those and other concerns that inspectors flagged fast enough, resulting in the Tuesday release of the expanded report. The Public Company Accounting Oversight Board first issued the firm’s initial results two years ago. In response to the board’s findings, the firm has provided more “rigorous” training to staff and introduced updated quality controls among other changes.
Senator calls for Deloitte to face fresh grilling over claims ex-partner David Milo shared military documents [ABC News (Australia)]
A federal senator says reports of a former Deloitte partner leaking confidential defense documents demonstrate the “threat” consulting firms pose to Australia. Former Deloitte consultant David Milo used confidential government documents to try and win work for his new consulting firm Synergy 360, according to Nine News reports on Thursday. In 2018, a year after leaving Deloitte, Mr Milo reportedly sent private military documents to Synergy 360 colleagues who were trying to win major military contracts at the time. In a statement, a spokesperson for Deloitte said it had made Defence aware of the matter. “It appears shortly before he left the firm David Milo transferred information from his Deloitte email to his personal email. Deloitte had no knowledge of this activity nor of these emails,” the statement read. “We take this discovery extremely seriously as it represents a breach of our policies and Mr Milo’s obligations.”
PwC partner sues to stop firm forcing him out over tax leaks [Australian Financial Review]
A veteran PwC Australia tax partner specialising in providing research and development incentive advice has become the first partner named by the firm over its tax leaks scandal to take legal action to stop the firm forcing him out of its partnership. Richard Gregg, who has been a partner at PwC since 2013, obtained a temporary injunction on Wednesday afternoon that prevents PwC from forcing him to “retire from the partnership of PricewaterhouseCoopers”, according to a court order. Mr Gregg was one of eight partners named in a PwC statement on July 3 who had “exited or [were] in the process of being removed from the partnership”. He alleges the firm named him publicly in the statement without warning and without giving him a chance to defend the allegations made against him by the firm.
Deloitte Loses $32 Million Award After KPMG Wins Fairness Suit [Bloomberg Tax (paywall)]
Deloitte & Touche LLP lost its $32 million financial services contract with the National Reconnaissance Office after a federal court called the agency’s process arbitrary and unfair to competitor KPMG LLP. The US Court of Federal Claims blocked the NRO from following what the court referred to as an “irrational” recommendation from the Government Accountability Office to perform a second review of the companies’ proposals after one senior consultant switched firms. The decision, unsealed Wednesday, further ordered that the agency may affirm its initial award to KPMG.
Deloitte moves to poach KPMG partners as Deal Street gets busy [The Economic Times]
Meanwhile in India…
Deloitte has moved to poach 15 partners from KPMG along with 130-150 professionals in the deal advisory space in one of the largest team movements among the Big Four in recent times. Rohit Berry, KPMG’s national head of deal advisory, is also moving to Deloitte along with Vivek Gupta, who heads M&A/private equity tax and family office practices for the firm. Sources in the know though said negotiations are still ongoing as KPMG is trying hard to retain the talent that’s leaving.
KPMG reveals partnership deed, in a big four first [Australian Financial Review]
KPMG Australia has taken the unprecedented step of allowing its partnership deed to be published, revealing partners can be given a one-time bonus payment worth up to a year’s income when they retire. The firm provided the “KPMG Australia Partnership Agreement 2022” to the Senate committee that is examining consulting, without requesting the document be made private. Its publication by the committee on Friday marks the first time in the local history of the big-four consulting firms that this usually tightly held material has been released publicly. PwC, which triggered the inquiry with its tax leaks scandal, has provided its agreement but asked the committee to keep it confidential. KPMG’s move will put pressure on Deloitte and EY to follow suit.
IRS moves forward with a new free-file tax return system, supporters and critics mobilize [AP via PBS]
An IRS plan to test drive a new electronic free-file tax return system next year has got supporters and critics of the idea mobilizing to sway the public and Congress over whether the government should set up a permanent program to help people file their taxes without needing to pay somebody else to figure out what they owe. On one side, civil society groups this week launched a coalition to promote the move toward a government-run free-file program. On the other, tax preparation firms like Intuit — the parent company of TurboTax — and H&R Block have been pouring millions into trying to stop the idea cold. The advocacy groups are exponentially out-monied.
IRS should stop wasting money on its own tax filing software [The Hill Opinion]
The concept of giving the IRS the power to create and run its own tax filing system has been around since before the turn of the century. In 1995, the IRS signed an agreement with the National Technical Information Service to create Cyberfile and spent $17 million on the program before it was cancelled. As the Government Accountability Office (GAO) noted in its Aug. 26, 1996, report, Cyberfile “was poorly planned and managed.” Understanding that the federal government should not be in a business that was already being successfully provided by the private sector, Congress created the Free File program, which began operating in 2003. As former IRS Commissioner John Koskinen said in a Jan. 15, 2016, press release, “Free File software can walk you through the steps and help you get it right,” and “[t]he real winner in this partnership has been the nation’s taxpayers.” The 2023 program is available for taxpayers who earned $73,000 or less in tax year (TY) 2022. While nearly 70 percent of taxpayers during the TY 2021 filing season were qualified to use Free File, only 2 percent used it. That does not mean that the government should solve this “problem” by wasting tens of millions of dollars creating its own software program, it means that if there was improved outreach, more qualified taxpayers would likely use the free services.
Pop star Shakira to face second investigation over allegations of tax fraud in Spain [NBC News]
A court near Barcelona, Spain confirmed it has opened an investigation into a second case of alleged tax fraud by international pop star Shakira. A complaint from the Prosecutor’s Office accuses the Colombian artist of defrauding the Tax Agency in personal income taxes and assets for the 2018 financial year. At the time, Shakira was residing in Barcelona with her ex-partner and retired soccer player Gerard Piqué and her two sons. She is now living in Miami with her children after the couple ended their 11-year relationship. As of Thursday morning, the singer “had not received any formal notification of the Prosecutor’s complaint,” a Shakira spokesperson stated in an email to NBC News.
£140m of fraud and error in R&D claims by UK manufacturers [Drives & Controls]
A new report from HMRC has revealed that small and medium-sized manufacturing firms were responsible for £140m of fraud and error in R&D tax relief claims during 2020-21. HMRC has revised its estimates of error and fraud by sector and this shows that almost a third (31%) of R&D claims by manufacturing SMEs were either wholly or partially “non-compliant”. According to the report, there were 18,500 claims for R&D tax relief by SME manufacturers in 2020-21, with a total value of £820m. Of these 6% were found to be totally non-compliant and 25% partially non-compliant.
Why we should stop demonising consultants [Australian Financial Review Opinion]
By Tom Burton, government editor
Call me a contrarian, but Canberra’s jihad against consultants has turned into an ideological battle over outsourcing and apparent calls for the public sector to have its monopoly over advice to ministers reinstalled. A fight between Labor and Greens senators to impale first PwC, and now the big consulting houses, has become a McCarthy-like vendetta, as senators express indignation at how well consultants are paid, and allege – largely unspecified – conflicts of interest. There is no doubt PwC should be held responsible for monetising its egregious Treasury confidentiality breach. But despite months of hearings, there has been little evidence to support the notion that somehow big consulting has been the source of the collapse of the Westminster government as we know it.
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