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Friday Footnotes: KPMG Accounts For Half of All Audit Fines; LGBT Accountants Dip; EY in Big Debt? | 7.29.22

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U.K Audit Regulator Hands Down Record Fines for Audit Failures [Wall Street Journal] The Financial Reporting Council on Thursday said financial sanctions during the year ended March 31 totaled £46.5 million before settlement discounts, equivalent to $56.6 million and up from £16.7 million the year before. The FRC also said it resolved more cases than in previous years. Higher sanctions and more concluded cases come as the U.K. is in the midst of a long-awaited overhaul of the audit and accounting industry, which will bring with it a new regulator to replace the FRC called the Audit, Reporting and Governance Authority.

KPMG hit with half of UK accounting fines as penalties reach new record [Financial Times] UK accountancy firms were fined a record £46.5mn last year, according to data released on Thursday, with more than half of the total levied against KPMG after its involvement in a series of audit failures and misconduct scandals. The figures underline the depth of the problems at KPMG, which audits more FTSE 100 companies than any other firm and has been battling to clear a backlog of investigations into its work.

Reconciliation Deal Pulls Accounting Rulemaker Into Tax Politics [Bloomberg Tax] A panel of unelected accountants in suburban Connecticut would play an outsized role in shaping tax policy for the nation’s largest corporations under a provision inside Senate Democrats’ sweeping tax, climate, and healthcare bill. The draft legislation uses a version of company income, as measured under US financial accounting rules, to determine what businesses owe in taxes. It’s designed to ensure that large companies making big “book” profits get taxed at a minimum rate of 15%. It puts pressure on what companies report in their financial statements, the rules for which are crafted by the Financial Accounting Standards Board.

LGBTQ+ accountant attrition & ESG information integrity signal growing role for accountants, new study finds [Thomson Reuters] LGBTQ+ accountants’ high attrition rate — with one-in-five LGBTQ+ respondents in the US reporting they have left the profession due to a lack of DEI — is highlighted in IMA and CalCPA’s 2021 study in the US. Indeed, much of this attrition came down to LGBTQ+ accountants not feeling comfortable bringing their full selves to work, according to Loreal Jiles, vice president, Research and Thought Leadership at IMA and one of the lead researchers of the series. “The expectation that, ‘I need to present myself as something else in the workplace’ was a key contributor to the decision to leave employers, and sometimes, the profession altogether,” Jiles states

What’s new in SAS No. 145: Enhanced definitions mean stronger audits [Journal of Accountancy] To bolster the risk assessment process and improve overall audit quality, the AICPA Auditing Standards Board (ASB) issued Statement on Auditing Standards (SAS) No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement. The new standard becomes effective for audits of financial statements for periods ending on or after Dec. 15, 2023. The revisions in SAS No. 145 do not change the key concepts underpinning audit risk. Rather, according to the Executive Summary of the standard, the standard “clarifies and enhances certain aspects of the identification and assessment of the risks of material misstatement to drive better risk assessment and, therefore, enhance audit quality.” These enhancements include changes to certain of the defined concepts.

Ernst & Young Split Plan Held Up by Debt Issues [Wall Street Journal] Ernst & Young’s effort to split its audit and consulting businesses has been slowed by a change in its U.S. leadership, as well as complications over its multibillion-dollar debts, according to people familiar with the matter. A “go or no go” decision by the Big Four accounting firm’s senior executives, originally scheduled for June, is now expected mid-August at the earliest, according to internal EY documents and the people familiar with the matter.

IRS gets $80B to ‘rebuild’ its capacity under Senate reconciliation deal [Federal News Network] The budget reconciliation package announced Wednesday night by Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.) would give the IRS $80 billion over the next 10 years, with a focus on tax enforcement.

KPMG leads Digital Future of Work hackathon [KPMG] Timed to coincide with the United Nation’s (UN) World Creativity & Innovation Day, teams from KPMG, Microsoft, BP plc and the University of Cambridge Think Lab came together for a two-day KPMG ‘Digital Future of Work’ hackathon, focused on the UN’s Sustainable Development Goal of `Decent work and economic growth’, which promotes full and productive employment and sustained, inclusive economic growth. The event saw participants from across the globe explore the challenges facing modern businesses, such as talent shortages and the long-term applicability of hybrid working. Participants were tasked with turning their ideas into viable prototypes using KPMG’s Illuminate platform to ideate virtually in advance of the hackathon.

Facebook Parent Meta Creates New Position for Its CFO [Wall Street Journal] Facebook parent Meta Platforms Inc. carved out a new role for its longtime chief financial officer David Wehner, promoting him to chief strategy officer, an uncommon title for a former CFO. Mr. Wehner will start in his new post Nov. 1, the Menlo Park, Calif.-based social media giant said on Wednesday. In his new job, he’ll oversee strategy and corporate development.

Looking to Hire New Graduates? Be Strategic in Skill Development [SHRM] Employers looking to attract new graduates need to strategically meet their training and development needs, said Suneet Dua, products and technology chief revenue and growth officer at PwC U.S. in San Francisco. These workers, Dua said, “want an instant impact, an instant reward” and skills that they can use the next day. “Gen Z is the cohort that’s going to make the big difference in this fourth Industrial Revolution,” Dua said. “Employers need to start embracing [that] new technology, and upskilling is a real thing. The faster they do that, the better their organization will be.”

521 days now. Listen to this man:

The accountant proving there’s strength in numbers [ICAEW Insights] An interesting profile on a powerlifting accountant: It’s a small subset of accountants that are also powerlifters. And an even smaller subset that are also female and Sikh – Karenjeet Kaur Bains (also an ACA) is blazing a trail.

John Krasinski’s Daughters Thought He Was An Accountant, Until Now [Scary Mommy] Although he has more than 50 film credits under his belt, John Krasinski is just an accountant in his daughters’ eyes. (Perhaps his days on The Office skewed their minds.) The actor and director appeared on The Tonight Show with Jimmy Fallon this week and said his children, Hazel, 8, and Violet, 6, have finally seen one of his movies. Until now, the girls apparently didn’t believe he was a Hollywood star.