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 email the editor, text us at 202-505-8885, or hit us up on Twitter @going_concern. See ya.
Private Equity
Private equity is coming for accounting firms. Some fear a ‘reckoning’ [Boston Business Journal]
Private-equity ownership can be a mixed bag. While they invest money and resources, PE firms look for profits in relatively short timeframes, often achieved through cost-cutting. Here in Massachusetts, the collapse last year of Steward Health Care has been widely blamed on its ties to PE.
Audit
Automated auditors: could AI undermine financial reporting? [Raconteur]
“Without clear metrics, it is difficult to know the extent to which AI is improving the quality of audits, increasing efficiency or just adding complexity,” says Akber Datoo, chief executive of D2 Legal Technology, a data and governance consultancy that works with financial institutions. “Paradoxically, AI can turn the audit into a black box,” he adds.
BDO’s audit work strongly criticised by UK regulator [Financial Times]
The FRC said only 50 per cent of the BDO audits that it inspected in its latest annual review required “no more than limited improvement”, a better performance than last year. Then, just 38 per cent of BDO’s audits were ranked as satisfactory. But the regulator said the most recent BDO audit work it scrutinised fell “significantly short of expectations”, adding: “BDO must urgently and robustly reassess how to improve its audit quality.”
Want Government Efficiency? Restore Medicaid – and Audit the Pentagon [National Priorities Project]
In November 2025, it is expected that the Pentagon will fail its annual audit due to “significant fraud exposure”. From 2017 to 2024, the Pentagon confirmed that there is $10.8 billion in confirmed fraud, with a notable case in 2023 when the Department confirmed spending $51,000 on a trash can. The GAO has submitted hundreds of recommendations to the Pentagon to improve its tracking and documentation process for decades. The DoD has merely responded by stating that “leadership commitment” is in progress.
Rand Paul introduces bill to audit the Federal Reserve [Washington Examiner]
Paul’s bill, the Federal Reserve Transparency Act, would require a complete audit of all of the Federal Reserve’s operational activities and mandate an enhancement of its decision-making through increased congressional oversight. The Comptroller General of the United States would complete the audit and include an inspection of “the Board of Governors of the Federal Reserve System and of Federal Reserve banks,” according to the bill. The bill stipulates that the audit must be completed less than “12 months after the date of enactment” of Paul’s legislative proposal.
Local Happenings
Auditor orders $675K in Indianola tax dollars withheld due to audit delinquency [The Enterprise-Tocsin (Mississippi)]
Fallout from the City of Indianola’s audit delinquency continues as the city was notified this month that the office of the state auditor has ordered that various local taxes be witheld from the city until it is in compliance with its audits. The total amount to be witheld is $675,000. The city’s last completed audit was for fiscal year 2018, which was finalized last year.
Hampton County forensic audit details financial mismanagement, ‘waste and abuse’ of public money [Bluffton Today (South Carolina)]
After more than three years of alleged financial scandals and concerned citizen outrage, an independent forensic audit has been conducted on Hampton County’s finances, and the results are neither positive nor surprising for many taxpayers. In the wake of the recent controversies and outcries which resulted in the state-mandated forensic audit, and after an April 2024 bidding process, the Hampton County Council selected accounting firm Eide Bailly LLP to conduct the audit, and the auditing firm was approved and formally engaged by the South Carolina Office of the State Auditor for that task on Aug. 1, 2024.
Missouri auditor says treasurer put $35 million into wrong state fund [Missouri Independent]
Missouri State Treasurer Vivek Malek improperly deposited almost $35 million in interest on a fund for improving Interstate 70 instead of putting it in the general revenue fund, State Auditor Scott Fitzpatrick said in a report issued Tuesday. The audit separately found that Malek’s office failed to conduct annual audits of the MOScholars tuition assistance program as required by law, the report stated.
Talent
We interrupt your regularly scheduled Footnotes to let you know that if your firm is hiring, you’ll want to check out Accountingfly’s top remote accounting candidates of the week. These are hand-picked tax, audit, and accounting professionals with all kinds of experience sure to meet your needs. Here they are:
Firm Watch
Doeren Mayhew expands to lakeshore market in deal for Grand Haven CPA firm [Crain’s]
The Troy-based Doeren Mayhew closed last month on the acquisition of Draper Bialik & Co. CPAs PLLC. The firm continues to operate out of its offices near downtown Grand Haven under the Doeren Mayhew brand name. The deal was Doeren Mayhew’s third in West Michigan in the last year.
Tax
The Risk of California FTB Audits is Increasing [JD Supra]
Did you know that the number of California FTB audits is increasing when compared to the trend of IRS audits in 2025? The California Franchise Tax Board, or FTB, has recently invested in advanced data processing systems and AI applications. This, combined with streamlined information sharing with the IRS, Employment Development Department (EDD), other federal and state agencies, as well as international tax agencies and Foreign Financial Institutions (FFIs), exposes businesses and individuals who reside in or conduct business within California to a higher risk of audit than they might face with the IRS.
Activists try to preserve IRS’s Direct File now that Trump has ended it [Washington Post]
“It’s no longer a question of ‘Can this be done, and can this be done well?’” said Gabriel Zucker, one of four people who have formed a group at the nonprofit Economic Security Project to keep preparing Direct File for future administrations to use. “It’s just a question of: Do we want to do it?”
Billy Long will be sworn in as IRS commissioner, taking over an agency he once sought to close [KSHB]
“In my first 90 days I plan to ask you, my employee partners, to help me develop a new culture here,” Long wrote in a message to IRS employees. “I’m big on culture, and I’m anxious to develop one that makes your lives and the taxpayers’ lives better.” While in Congress, where he served from 2011 to 2023, the Republican sponsored legislation to get rid of the IRS. A former auctioneer and real estate broker, Long has no background in tax administration.
Deloitte Tax Acquires Assets of Trust Processing Solutions, a Leading Fiduciary Tax Services Provider [PR Newswire]
The Deloitte Tax ITG and former TPS employees will form one unified team, offering fiduciary tax services, as well as charitable, individual, gift, estate and information reporting tax services.
Law & Order
Ghana Court to Start Hearing $450 Million Claim Against Deloitte [Bloomberg]
A Ghanaian court will hear arguments in a suit brought by DramOil and Trading Ltd. that challenges a Deloitte & Touche audit report and seeks $450 million in damages from the accounting firm. A commercial court in 2015 contracted Deloitte to audit the books and payments between DramOil and Vihama Energy Co. following a trading dispute between the two Accra-based oil-trading companies. The post-judgement audit was to determine how much Vihama owes DramOil. Deloitte in 2019 concluded the company doesn’t owe DramOil, resulting in $188 million in losses for the firm that has taken the accounting specialist to court.
Lenexa tax preparer sentenced to prison for false income tax returns [KCTV]
Sixty-one-year-old Hophine Bwosinde pled guilty to one count of aiding and assisting in fraud and false statements, according to federal court documents shared Friday by the U.S. Department of Justice. Bwosinde was sentenced to three years in prison for filing false income tax returns for his clients. Those false income tax filings led to losses that exceeded $1.5 million for the Internal Revenue Service.
