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Friday Footnotes: For the Last Time, Salaries Are Too Low; NOCLAR Is Back; Big 4 Beat Up Again | 3.1.24

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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.

Comments are closed on Friday Footnotes and the Monday Morning Accounting News Brief by default. If you have something to say about any stories linked here you are welcome to contact the editor or hit us up on Twitter @going_concern. See ya.

Big 4

Hahahaha Big 4 is still getting beat up in Australia. Damn you, Peter Collins. Damn you!

Chartered Accountants mistakenly let ex-PwC partner avoid investigation [Financial Review]
Speaking of Peter Collins, AFR is still on the beat like a tick on a dog’s ass.
Chartered Accountants ANZ accidently allowed Peter Collins to avoid investigation by its disciplinary committee by letting him cancel his membership. This was even though the former PwC partner told the professional body he was “subject to an investigation” by the tax agents’ regulator. Mr Collins’ disclosure about the Tax Practitioners Board investigation into his activities while at PwC in his November 2022 resignation email should have triggered a process at CA ANZ that flagged his membership and prevented him from resigning before the body investigated.

‘Like a war zone’: Deloitte responds to claims about ‘dark and aggressive culture’ [Accountants Daily]
Deloitte chief executive Adam Powick said while the reports made to the Senator by former staff were “concerning at face value” he rejected claims that partners “sit at desks and push pencils”. “All of us are expected to be servicing clients or respectively managing teams. I still serve clients. Tom Imbesi, [Deloitte’s chair], still services clients. Our partners absolutely service clients and are on the front line every single day, working with clients,” he told the inquiry. “One of the expectations for partners and leaders is that as you go through the organisation is that they are very much still market focused and serving clients.” Mr Powick told the inquiry that there will always be people who make comments but that overall the reports about the firm’s culture was not a culture he was familiar with. “I don’t have a lot of tolerance as a leader for people that don’t put their clients first and don’t put their people first,” he said.

Powick is responding to this (just one item from last Friday’s Footnotes):

EY and PwC’s New Leaders Must Help Restore Trust, Build Pipeline [Bloomberg Law]
The new leaders of EY Global and PwC US—Janet Truncale and Paul Griggs, respectively—hail from the financial services auditing side of the business at a time when consulting services make up an increasing share of the total revenue, despite intense competition and cost-cutting by clients. Meanwhile, the audit side is under increased regulatory pressure because of perceived lapses in audit quality at accounting firms of all sizes. Truncale and Griggs would have their work cut out for them if these two challenges were the only tests they faced. But these issues are matched, and possibly exasperated, by a litany of broader industry challenges: a still-decreasing pipeline of future accountants, potential shakeups to the partnership model, artificial intelligence, and defending the relevance of the auditing industry.

Are federal IT systems supporting the targeted service outcomes? Deloitte examines the future role of the government [Channel Daily News]
Of course that’s Deloitte’s strong view, they stand to profit from it.
In an interview with IT World Canada, consulting giant Deloitte highlighted the importance of an ecosystem-based approach to tackle issues around digital equity in Canada and service delivery challenges in the public sector. “Our strong view is that the people of Canada benefit when there’s effective collaboration between public and private organizations, including on critical government programs and services,” said Jaimie Boyd, Canada’s national digital government leader, Deloitte. “When we collaborate effectively, it allows us to mobilize the experience, the expertise, the contextual knowledge, leading practices globally.”

“I do definitely recognize we are the largest professional services firm in Canada,” said Boyd, when asked about the concerns of the MPs. “And with that comes a responsibility that we are proud to carry. We’re proud to serve the people of Canada and perform our work in strict accordance with professional standards. And we’re absolutely committed to upholding the utmost standards of trust.”

Accountant Shortage

There are 340,000 Fewer Accountants, and Companies Are Paying the Price [Bloomberg]
Aspiring accountants essentially need five years of college to earn a Certified Public Accountant license. That requirement, the “150-hour rule,” has become increasingly expensive to satisfy given steadily rising tuition costs. For many 22- to 27-year-olds, known as Generation Z, their average student debt of more than $20,000 and the lure of higher-paying Wall Street and Silicon Valley firms means the time and effort required to become a CPA doesn’t pencil out. Last year, the median salary for full-time entry-level accounting jobs was roughly $62,500, up from about $50,000 in 2020, according to Handshake data. The median pay advertised for entry-level management consulting and financial analyst roles, by contrast, was $70,000 and $75,000, respectively. For software engineers, the median entry-level pay was $93,000.


Deloitte: How to Prevent AI from Taking Your Job [AI Business]
AI Business recently sat down with David Mallon, managing director at Deloitte Consulting, to discuss the impact of AI on jobs and ways in which white-collar employees can avoid being replaced by AI.

An excerpt that scares us:

The key to reducing errors with AI: Technology acceptance [Journal of Accountancy]
Gartner recently asked controllers about how often they or their peers make financial errors, as well as their thoughts on causes. Though survey respondents weren’t asked about the significance of the errors cited, 59% acknowledged “several errors per month.” With ever-increasing demands on accountants’ expertise – 73% said their workload has increased over the past three years because of new regulations – everyone involved in the finance function could benefit from rapidly developing technology solutions.


PCAOB to Host Virtual Roundtable on NOCLAR Proposal, Reopen Comment Period Until March 18 [PCAOB]
We’ll attend and report back. This might be good.
Public Company Accounting Oversight Board (PCAOB) staff will host a public virtual roundtable regarding the proposal to amend PCAOB auditing standards related to the auditor’s responsibility for considering a company’s noncompliance with laws and regulations (NOCLAR) on March 6, 2024, at 9:30 a.m ET. In light of the roundtable, the Board is reopening the comment period beginning today through March 18, 2024. On June 6, 2023, the PCAOB issued for public comment a proposal (PDF) that would amend PCAOB auditing standards related to the auditor’s responsibility for considering a company’s NOCLAR, including fraud. If adopted, the proposal would strengthen auditor requirements to identify, evaluate, and communicate possible or actual noncompliance with laws and regulations. The previous public comment period closed August 7, 2023, and all comments are available on the PCAOB website.

Audit Deficiencies by Accounting Giants Grew in Latest Inspections, U.S. Regulator Says [Wall Street Journal]
Several U.S. accounting giants had greater deficiencies in their audits of public companies’ 2021 financial statements compared to the previous year, according to annual inspection reports released Wednesday by the Public Company Accounting Oversight Board. The regulator, which compiles its findings with a lag, inspected 215 audits conducted by the Big Four accounting firms in the U.S.—Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers—down from 220 a year earlier. Deloitte, EY and PwC had an average deficiency rate of about 24%, up from roughly 13% a year earlier.

Independence is a cornerstone of the auditing profession [Nebraska Examiner]
The recent controversy in Nebraska, involving an attempt by the Department of Health and Human Services to hire a private CPA firm to perform the statewide federal single audit, underscores a critical debate about the role of external auditors in governmental auditing. However, this incident should not be seen as an indictment of the CPA profession or the use of licensed accounting firms. Instead, it highlights the need for a nuanced understanding of the important role these professionals play in ensuring transparency, accountability and the compliant use of taxpayer funds.

Crestline Exempted Village School District declared ‘unauditable’ by Auditor of State’s Office [Crawford County Now]
Expect to see a lot more of these as the accountant shortage worsens.
The Crestline Exempted Village School District in Crawford County has been declared “unauditable” by the Auditor of State’s Office for the periods ended July 1, 2021, through June 30, 2022, and July 1, 2022, through June 30, 2023. This declaration was made due to inadequate financial statements and records that hindered the completion of an audit.

Protecting the Profession

Q&A: Melancon warns of threats to CPA licensure [Journal of Accountancy]
Melancon addressed numerous issues, including the following:

  • How AICPA & CIMA are fighting legislation in almost every state that seeks to dismantle the licensure system for professionals such as doctors, engineers, and CPAs. “We have to defend in all 50 states,” Melancon said. “We cannot afford to lose in one.”
  • The ways generative artificial intelligence (Gen AI) technology creates new opportunities and challenges for accountants. Melancon urges accountants not to ignore tools such as ChatGPT.
  • The crucial importance of reskilling for accountants and how midcareer CPAs must scale the steepest hill to keep pace.
  • The current state of private-equity investment in public accounting and other changes in the ways firms are valued and owned.
  • The need for business model transformation in accounting firms.

This Still Doesn’t Explain Why They Picked ‘FORVIS’

From Historical to Invented: The Evolution of Accounting Firm Names [INSIDE Public Accounting]
We’re history dorks over here so we thought this was cool.
CPA firm names have traditionally listed partner initials or partner names, which invariably grew longer as partners were added or merged in – or got scrambled around as partners exited. But combining firm names, shoving together last names or mixing partner initials into a kind of alphabet soup can sometimes be confusing, while also tending to evoke history rather than the future. The firms profiled here had an opportunity to make a new name for themselves – some had been changed repeatedly, sounded stodgy, were hard to pronounce, or contained names of retired partners who long ago disconnected from the firm. One soon-to-be-merged firm stuck with custom, as it was determined that the individual component brands were so well established and respected that changing them would do far more harm than good.


Chattanooga accountant and firm slapped with ban after $1.6M investment scam [WTVC]
A Chattanooga accountant and his firm cannot operate in Tennessee anymore. The agreement affects Jonathan Frost and his company. 10 clients made payments to the firm for services that were never provided, all together they paid about $1.6 million for investment but they only recouped about $230,000 of what was owed.



If your firm is hiring be sure to check out Accountingfly’s top remote accounting candidates of the week. They’re ready to get to work. Literally.

Firms find it’s cool to be kind [Journal of Accountancy]
Calling BS on this. They said the same thing about millennials.
“Gen Zers are focused on the meaningful work connection and asking questions in interviews that we haven’t heard up to now, such as ‘What are your values?’ ” said McCall. “Before their generation, questions focused more on technical abilities or the kind of work they would do inside the firm.”

Bosses are back in power — so get used to companies quiet cutting and quiet firing workers this year [Business Insider]
Bosses are quiet firing staff by making jobs unappealing through RTO mandates and harsh performance reviews. Instead of conducting major layoffs, some bosses are resorting to discreet tactics to cut head count. Experts say it’s because employers have more leverage now due to fewer job opportunities.