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October 2, 2023

Friday Footnotes: EY and KPMG This Week’s Big 4 Lawsuits; Eliminate Accounting Majors?; Auditors Fire Messy Municipal | 4.29.22

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New Deloitte report: working women face alarmingly high levels of burnout despite shifting work arrangements, rise in hybrid working [PR Newswire] Widespread burnout and lack of flexible work continues to hinder progress in supporting working women, according to the latest Deloitte report, “Women @ Work 2022: A Global Outlook” released today. The research reveals that 53% of women say their stress levels are higher than they were a year ago, and almost half feel burned out. This burnout is a top factor driving women away from their employers: nearly 40% of women actively looking for a new employer cited it as the main reason. More than half of those surveyed want to leave their employer in the next two years, and only 10% plan to stay with their current employer for more than five years. Representing the views of 5,000 women across 10 countries, the research shows worrying long-term impacts as rates of stress and experiences of harassment or microaggressions remain high. The survey also illuminates troubling findings about the “new normal” of work, as almost 60% of women working in hybrid models (arrangements that include any combination of remote and in-office work) report they have already felt excluded.

ICYMI | The CPA Evolution Project Realigns the Professional Certification and Challenges Accounting’s Viability as a Stand-alone Major [The CPA Journal] Accounting—at least as an independent field of study—is becoming obsolete in today’s technology- and analytics-focused world. Its value lies in its interdisciplinary applicability and position as a foundational business curriculum. In recognition of that reality—and to maintain a pipeline of candidates open to CPA licensure, increase the number of engaged accounting students, and keep the profession relevant to the next generation—this author believes that colleges and universities should eliminate the accounting department as a stand-alone department and reorganize accounting under finance and information systems departments.

4 Ways CPAs Can Explain the Tax Benefits of Direct Indexing to Clients [Parametric] Let’s unpack what CPAs should know about direct indexing from a tax perspective—and explore some unique and effective methods for explaining it to your clients.

PwC Pulse Survey: Next in work [PwC] Employees have had more than a year to reflect on their needs and aspirations, and many want a new model of work. Our latest US Pulse Survey found that 65% of employees are looking for a new job. We also talked to executives, 88% of whom told us they are seeing higher turnover than normal.

Less work for EY auditors? What about more accountability [Financial Times] “Quality before growth, quality before margin.” It could be the mantra of a fastidious Swiss chocolatier, a 750-year-old Japanese knife manufacturer or an English maker of hand-built wooden cars. But it is actually the new positioning from scandal-racked EY Germany. Scarred by its role as auditor to fraudulent payments group Wirecard, the Big Four firm has searched its soul (more thoroughly than it searched Wirecard’s books) and this week announced “the most comprehensive process of change in its more than 100-year history”.

KPMG U.S. Launches Inaugural Impact Plan Affirming Commitment to Transparency and Accountability [PR Newswire] KPMG LLP1 published its inaugural U.S. 2022 Impact Plan today outlining environmental, social, and governance (ESG) strategies and commitments across four pillars: People, Planet, Prosperity, and Principles of Governance. Capturing progress throughout the fiscal year ending on September 30, 2021, the report represents an important milestone for KPMG as it advances its ESG strategy, embeds good governance and ethics, considers its impact on the planet, and fosters a prosperous, equitable, and sustainable society. The information within the report represents a consolidation of past reporting efforts and was prepared in accordance with the World Economic Forum International Business Council Stakeholder Capitalism Metrics.

KPMG sued over audit work for collapsed miner [Australian Financial Review] Shareholders in failed mining company CuDeco have accused accounting giant KPMG of misleading and deceiving the market in its audits of the collapsed outfit, adding to the slew of investor class actions faced by professional services firms. In a statement of claim filed with the Federal Court, the disgruntled investors claim KPMG failed to act with due care and skill, making representations about CuDeco’s financial reports that were “materially misleading” and “not based upon reasonable grounds”.

Ernst & Young Hit With U.K. Suit Over NMC Audit Negligence [Bloomberg] Administrators for NMC Health sued Ernst & Young in the U.K. over claims of negligent auditing spanning six years, escalating an intense battle over the hospital operator’s collapse. The lawsuit, which was filed on Thursday, relates to work that EY carried out between 2012 and 2018, according to a spokesperson for the joint administrators, Alvarez and Marsal. “The issues that we found at NMC Healthcare following our appointment were broad, complex and multi layered,” they said. “As administrators, we have an obligation to maximize returns for creditors and this action is part of those wider efforts.”

A question for the masses from Twitter:

Dropping of UK audit bill from Queen’s Speech comes under fire [Financial Times] Accounting and investor groups on Thursday hit out at the government’s move to ditch a bill from its next legislative programme that would have implemented long-delayed reform of audit and corporate governance. A draft bill to underpin the reform, including the creation of a new regulator of audit firms, has been dropped from the Queen’s Speech scheduled for May 10, according to government officials.

Global Auditing Firms Struggle to Leave Russia [Wall Street Journal] Big consulting firms such as Accenture PLC and McKinsey & Co. have quit or stopped all client work. But the Big Four accounting firms are still there, trying to unwind complicated relationships with their Russian counterparts.

Grant Thornton gives employees extra time off this summer [] The accounting and consulting firm’s new summer time-off policy will make the three summer holidays of Memorial Day, Independence Day, and Labor Day into four-day weekends. Additionally, Fridays in June, July, and August will have a closing time of 1 pm. The firm says the added time off its part of its overall employee wellbeing strategy.

City of Santa Fe ‘essentially fired’ by auditing firm; state says it will intervene [Santa Fe New Mexican] CliftonLarsonAllen, the private auditing firm hired to help the city of Santa Fe complete a financial audit due in December, has resigned from the job, and State Auditor Brian Colón announced Tuesday his agency plans to intervene. Colón said in an interview Tuesday the city was “essentially fired by its auditor.” Representatives for CliftonLarsonAllen in Albuquerque could not be reached for comment. In an emailed letter, the firm said it was resigning to “allow the City of Santa Fe to prioritize its efforts on current accounting matters.”

SPAC Accounting Troubles Continue as Industry Scrutiny Mounts [Bloomberg Tax] Four special purpose acquisition companies in the past two weeks have flagged errors in accounting for certain underwriter incentives serious enough to require them to restate their past financial statements. Given the similarity of the deals and the complexity of the accounting, more could be on the way. “It’s something many of the SPACs have already done, and it’s also something that’s fairly material to their financial statements, so they’ll have to make the correction,” said Derryck Coleman, director of research at Audit Analytics.

What are your plans for next year? Same as last year.

NFTs Are Continuing To Cause Accounting Issues, Even After Tax Season [Forbes] Non-fungible tokens (NFTs) might be seen by some as just the latest fad or iteration of cryptoassets that need to be contended with, but there are fundamental differences that accounting professionals should keep an eye on moving forward.

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