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 email the editor, text us at 202-505-8885, or hit us up on Twitter @going_concern. See ya.
Technology
Big Tech Accounting Creates a Blind Spot in the AI Boom [WSJ]
Just five big tech companies are projected to spend a total of $3 trillion on property and equipment over the next four years, and that rapid growth is making it harder to analyze their earnings. As capital expenditures have skyrocketed, controversies have occasionally flared over companies’ moves to extend the useful lives of the assets they are depreciating. Even a small adjustment to an asset’s useful life can now have a big impact on earnings. Meta Platforms said its $60.5 billion of earnings last year included a $2.6 billion boost from lengthening the estimates for the useful lives of its servers and network assets.
Law & Order
Italian tax police search Amazon in new tax probe [Reuters]
The Guardia di Finanza tax police also searched the homes of seven Amazon managers and the offices of auditing firm KPMG. The probe is a new strand of an investigation looking into whether Amazon had an undisclosed, permanent base in Italy from 2019 to 2024 and should therefore have paid more taxes in the country.
Edgio Execs Settle Investor Suit Over Accounting for $15 Million [Bloomberg Tax]
Three Edgio Inc. executives have agreed to pay $15 million to settle investor claims that the now-bankrupt technology company misrepresented its revenue, investors told a federal court.
Lawmakers seek to penalize DoD if it fails to pass a clean audit [Federal News Network]
The bill would also require DoD financial leaders to meet additional qualifications — future Pentagon and service-level comptroller nominees would all have to be certified public accountants (CPAs) with prior experience serving as chief financial officers of federal or state agencies that already passed a clean audit or of public companies that achieved a clean audit during their tenure.
Big 4
PwC UK applications jump 35% in graduate jobs drought [Financial Times] Big Four accounting firm says it has decided not to automate some junior work so staff can develop judgment.
Four partners leave EY after independence rule breach on Shell audit [Financial Times]
Four EY partners have left the firm after breaches of independence rules in its audit of Shell that resulted in the oil major stripping the accounting firm of a $66mn-a-year contract. The partners left the Big Four firm in December as it rushed to contain the fallout from the compliance failure.
Here are the biggest accounting firms in Greater Philadelphia [Philadelphia Business Journal]
Deloitte, PwC, EY, KPMG, and CBIZ are top five in that order.
State and Local
Kansas bill would give state employees 10% of savings from reported fraud, waste or abuse [Kansas Reflector]
Inspired by the corporate world, a Kansas state senator wants to provide a monetary incentive for state employees to report fraud, waste or abuse. He said he was inspired by his former employer, United Airlines, which had a similar program that gave an employee 10% of the savings if they identified a way for the company to save money.
Chattanooga accountant Jonathan Frost free on $10K bond after pleading guilty [Chattanooga Times Free Press]
While the magistrate judge accepted Frost’s plea of guilty to conspiracy to commit wire and tax fraud and conspiracy to commit money laundering, a federal district judge still needs to accept the plea, Frost’s attorney, Lee Davis, said by text.
Macomb County man sentenced in $2.5 million fraud case [Click on Detroit]
According to authorities, Samer Kammo worked with his wife, Christina Anasi, and Rita Shaba to submit fraudulent PPP applications for several businesses. They misrepresented payroll information and falsely certified that the loan funds would be used for permissible business-related purposes.
FBI: Missouri man on the run in $220 million cattle fraud scheme [KCTV5]
The Federal Bureau of Investigation announced on Friday, Feb. 13, that agents are searching for Joshua R. Link, 32, of Stafford, Missouri. He is the only suspect still at large.
Audit of Downtown Partnership of Baltimore raises ‘potential fraud’ concerns [WBBF]
The auditor said the “possibility exists of financial statement errors or potential fraud occurring and not being detected.” This was due to what the audit described as a lack of timely account reconciliation in the 2024 fiscal year, which means DPOB wasn’t doing the proper checks to ensure it had accurate financial records.
