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Audit
Inside EY’s U.S. Auditing Cleanup to Reduce Shortfalls [Wall Street Journal]
Auditing deficiencies are expected to be at or below 9% this year for EY as the Public Company Accounting Oversight Board wraps up its inspections process for the Big Four accounting firms, people familiar with the matter said. EY has chipped away at the rate from 46% in 2022, then 37% and 28% in 2023 and 2024, respectively. The firm had the highest deficiency rate among the Big Four—which also includes Deloitte, PricewaterhouseCoopers and KPMG—in the U.S. in those three years. EY’s 2025 standing among peers is unknown as the other three firms haven’t disclosed their deficiency rates yet.
Technology
AI-powered hacking in accounting: ‘No one is safe’ [Journal of Accountancy]
“I have performed many cybersecurity assessments for financial institutions, and the urgency just wasn’t there years ago. It didn’t feel real, as not enough organizations were getting hit for it to matter,” explained Chris Tait, a principal specializing in cybersecurity risk management at Baker Tilly. “It’s like a pandemic now, to some degree, because no one is safe,” Tait said.
Internal auditors are putting GenAI under the microscope [CFO Brew]
GenAI is now the second-highest priority of internal audit teams, behind only cybersecurity, according to professional services firm Jefferson Wells’s latest Internal Audit Priorities survey. GenAI moved up three spots after making its first appearance in the top five in last year’s survey.
Fraud
Auditor allegedly bribed with Rick’s Cabaret lap dances indicted for fraud in New York [Reuters]
New York state auditor Alton Plunkett allegedly received at least 13 complimentary trips to RCI-owned strip clubs in the Miami area, including up to several thousand dollars per day of lap dances. “This was the best trip I had in Florida,” Plunkett allegedly wrote in a message to to RCI’s controller included in the indictment. “The girls were very beautiful and nice. On Thursday night there so many beautiful women. That’s why I do many lap dances instead of going to the room.”
Tax
Job cuts mean strong 2025 tax season may be hard to repeat, IRS watchdog warns [Journal of Accountancy]
The 2025 tax filing season went smoothly with the IRS processing more tax returns than in the previous year and exceeding its level-of-service (LOS) goal set for answering phone calls, a government watchdog said in its review of the agency’s work. And even though the IRS began reducing its workforce in January, people in critical filing season positions stayed on the job, helping the agency to operate effectively during tax season, the Treasury Inspector General for Tax Administration (TIGTA) said in the report [PDF], dated Sept. 29.
Local News
Texas attorney general tells 4 cities to drop tax hikes amid investigations into incomplete audits [The Texas Tribune]
Texas Attorney General Ken Paxton, in letters to city officials in Odessa, La Marque, Tom Bean and Whitesboro, said his office received complaints that the cities either missed key financial reporting deadlines or have incomplete auditsA new law, signed by Gov. Greg Abbott in May, forbids local governments from raising property taxes if they are not complying with the state’s auditing requirements. It grants the Paxton’s office the power to investigate complaints.
Montgomery Co. accountant sent to federal prison for $24 million COVID relief fraud scheme [WTOP (Maryland)]
A Gaithersburg, Maryland, accountant has been sentenced to three years in federal prison, followed by six months of home confinement, for conspiring to commit wire fraud by submitting fraudulent loan applications for various COVID-19 relief benefits. According to the U.S. Attorney’s Office for Maryland, 54-year-old Harold Dotson was part of the scheme that filed more than $24 million in phony CARES Act loan applications between 2020 and 2022.
Emails published in missing money audit report stir rumors about Erie County Clerk’s Office [WIVB (New York)]
The 74-page report by Weaver and Tidwell LLP still stirred the pot by including two cryptic emails McDougall sent to himself in 2022, with the subject headlines “extortion money” and “Mickey’s extortion money,” believed to be a reference to Erie County Clerk Michael “Mickey” Kearns. McDougall sent himself the emails with no attachments or anything written in the body of either of them, leaving people to wonder and guess what they could have meant. And the rumors swirled. The two emails are part of nearly 800 McDougall sent to himself, all of which the auditing firm reviewed.
In abrupt change of course, JCPS postpones hiring firm to help identify future budget cuts [Louisville Courier Journal (Kentucky)]
Hours after indicating his hope to hire an accounting firm to assist the district in making necessary budget cuts, Jefferson County Public School Superintendent Brian Yearwood withdrew his recommendation for the approval of that hire during a special called meeting Sept. 30. Jefferson County Board of Education members were set to approve hiring Dean Dorton during the meeting. A proposed contract attached to the agenda showing JCPS would pay the firm up to $50,000 for its services, with the firm set to begin the work the following day.
Talent
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People
KPMG expands Tallahassee presence with key promotions in government practice [The Capitolist]
The firm has hired Savannah Jefferson, who most recently served as Director of External Affairs for Governor Ron DeSantis, as a Director within its Tallahassee office. In that role, Jefferson was a senior advisor to the Governor and a key liaison to stakeholders across the state, overseeing strategic engagement on behalf of the Executive Office.
BDO USA Welcomes Principal Class of 59 Professionals [BDO]
They made this year’s announcement ridiculously annoying with an interactive map rather than a list
KPMG Appoints James Kroeker as Independent Director to its U.S. Board [KPMG]
During his distinguished career, Kroeker has held several prominent roles, including vice chairman of the Financial Accounting Standards Board (FASB), where he led the development and implementation of Generally Accepted Accounting Principles (GAAP) and worked to improve transparency and reduce complexity in financial reporting. Previously as chief accountant at the U.S. Securities and Exchange Commission, he served as the senior accounting professional and principal advisor on accounting and auditing matters and led significant initiatives to enhance financial disclosure during critical periods. Kroeker also held leadership positions at Deloitte, including deputy managing partner, Professional Practice and partner in the National Office Accounting Services group, where he consulted on accounting standards and supported engagement teams.
Accountant challenges notice period after duties gradually removed [Human Resources Director]
The Supreme Court of British Columbia recently dealt with a wrongful dismissal claim involving a controller who received eight months’ working notice in October 2022. The worker was told his employment would end the following June, and that during this notice period, he would carry out his usual duties with no changes to the terms and conditions of his employment. However, the worker argued that his duties were systematically reduced during the notice period until he was left with virtually nothing to do.
