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Friday Footnotes: KPMG Picks a Woman to Lead; Auditor Roasts Disorganized Client; PwC and EY Team Up on a Failure | 5.10.24

two little dogs on a bench
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.

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Clients Are the Worst

Council holds off on request to hire new accounting firm amid continued questions over city finances [WLBT3]
Some funny back-and-forth drama here.
Nearly eight months after the 2023 fiscal year ended, Jackson, Miss. has yet to bring on an accountant to audit that year’s finances. Council President Aaron Banks says the accountants claim city employees won’t provide the information they need to complete the audits. The city employees say the auditors are hard to work with. “Finance gets you the information, then you ask for the information back a different way, then [Finance] gets you the information, and you ask for the information back again in a different way,” he said. “Instead of just somebody taking themselves over there, sitting down with them, and saying, ‘This is what is needed…’ instead of all this back-and-forth. I’m sick of the crap.” Scott Hodges, a partner with Tann, Brown & Russ Co., said changing auditors won’t fix the city’s financial problems. “The problem is the financial statement draft is not ready, the information has not been provided. It has nothing to do with the audit firm. It has to do with the city’s Finance Department not providing the information,” he said. “You can hire any auditor you want, but the delay would be the same.”

Firm Watch

CLA Expands AI Capabilities with Strategic Acquisition of UK-Based Technology Firm [CliftonLarsonAllen]
CLA (CliftonLarsonAllen LLP), the eighth-largest accounting firm in the United States, today announced its acquisition of Engine B, a next-generation AI-driven, UK-based technology company that specializes in delivering generative AI solutions for the professional services industry, providing deeper insights and opportunities for their clients. This strategic move — CLA’s first global acquisition — underscores the firm’s commitment to harnessing cutting-edge technology to enhance client service and enable CLA professionals to focus more on client engagement, pursuing new business opportunities, and delivering value-added services.

Small Business Pulse: Higher costs prompt Westbrook accounting firm to raise rates [Mainebiz] Higher costs are weighing on the Swanson Group LLC, a Westbrook accounting firm with 33 employees that raised its fixed and hourly rates this year. It expects to do so again in 2025. “We increased our [fixed and hourly] rates by 20% to 25% in 2024, and I suspect we will need to have a similar increase for 2025,” said firm founder Tabitha Swanson. “We have continued to see pricing increases on products/services we utilize this year, and our pay for all staff needs to continue to increase in order to maintain a qualified staff to service our clients properly. Our industry has become more competitive since COVID with the remote worker environment. We are no longer competing only with Maine firms to keep our qualified staff. We are competing nationally.”

Big 4 accounting firm KPMG names first woman to lead Hartford office [Hartford Business Journal]
Big Four accounting and consulting firm KPMG LLP has named a new managing partner of its Hartford office. Susan Jackson will be the first woman to lead KPMG’s Hartford office when she takes over the role on May 15. She will succeed Tom Daugherty, who became managing partner in April 2017. Daugherty will continue to serve as lead partner on one of the firm’s largest insurance industry clients, and maintain his involvement in industry and community organizations, KPMG said.

Columbia accounting firm disciplined for promoting illegal tax scheme [Columbia Missourian] A Columbia accounting firm has been disciplined in federal court for promoting an unlawful scheme that advised clients to sell property and purchase annuities to provide a source of income without paying taxes. The Columbia CPA Group and its owner, Aric Elliot Schreiner, were also ordered to pay $400,000 in “ill-gotten gains” from the scheme. The U.S. District Court for the Western District of Missouri permanently barred Schreiner and five other defendants from promoting, selling and marketing these investment products, called charitable remainder annuity trusts.

Accounting and Advisory Firm Brown Plus Welcomes New Team Members [PRWeb]
Helen Badman joined the Firm as an Employee Specialist. She brings over 20 years of experience, including implementing talent management strategies, conducting workforce planning, optimizing human resources (HR) processes and full-cycle recruitment. She is a graduate of Penn State University. Helen is located at the Brown Plus office in Camp Hill, Pennsylvania. Makaloba (‘Mak’) Barandao joined Brown Plus as an Audit Senior Associate, specializing in accounting and auditing services. Mak earned his Bachelor’s degree in Business Administration in Accounting from Towson University. He is located at the Brown Plus office in Westminster, Maryland.

Practice

Why Mid-Sized Accounting Firm Wealth Management Practices Underperform [Financial Advisor]
For years, many accounting firms have established wealth management practices, and more continue to do so. The aim is, first and foremost, to better serve their clients. Also, the revenues and profits from wealth management are appealing. The complication is that most accounting firm wealth management practices fail to achieve their potential. In a survey of 328 senior partners at accounting firms with 10 or fewer partners who had wealth management practices, 55% reported that these practices were unsuccessful because they failed to meet the firm’s expectations (Exhibit 1). Meanwhile, 31% of the senior partners reported that their wealth management practices were moderately successful, and only 14% said their wealth management was very successful. For more on this study, see Why Few Accounting Firm Wealth Management Practices are Successful.

Read more: Why Mid-Sized Accounting Firm Wealth Management Practices Underperform

Let’s Check in on Twitter

Tax

Rich Taxpayers In Dark About What IRS Data Was Illegally Leaked [Bloomberg Tax]
The IRS knows little about what specific taxpayer information former IRS contractor Charles Littlejohn stole when he leaked thousands of tax returns—including that of former President Donald Trump and hundreds of billionaires—to news outlets years ago. The IRS told taxpayers last month that their information was compromised, about four years after the historic data leak and four months after Littlejohn was sentenced to five years in federal prison for the crime. Now, the IRS has sent a follow-up letter to those affected who requested more information with details on what the agency knows about the situation. The agency had to wait until the criminal investigation into Littlejohn was complete before it could access which information was stolen. The notification comes amid a wave of uncertainty for wealthy taxpayers who have the option to sue but are hesitating because the damages they’d get in a win are so small. So far, two billionaires have taken legal action.

​​Join the Taxpayer Advocate Service at the 2024 IRS Nationwide Tax Forum​ [Taxpayer Advocate Service]
This year, the National Taxpayer Advocate Erin M. Collins will host Town Halls in Chicago, Orlando, Baltimore, and San Diego, and the Deputy National Taxpayer Advocate Kim Stewart will host one in Dallas/Grapevine. TAS invites tax professionals attending this year’s forum to also sign up and participate in our group sessions on “IRS Online Accounts and Tax Pro Accounts” and “Appeals Alternative Dispute Resolution (ADR).” The knowledge and innovative ideas shared during these discussions help TAS improve taxpayer service on these issues.

IRS boosts health savings account contribution limits for 2025 [CNBC]
The IRS has unveiled the 2025 contribution limits for health savings accounts, which are triple-tax advantaged for medical expenses. The new HSA contribution limit for 2025 will be $4,300 for self-only health coverage, up from $4,150 in 2024, based on inflation adjustments, the IRS announced Thursday. The contribution limit will also increase for savers with family coverage. In 2025, those with family plans can deposit up to $8,550 into HSAs, which is up from $8,300 in 2024.

On Campus

FICPA & Nova Southeastern University introduce cost-free, fifth-year Bridge to CPA program [FICPA]
The Bridge to CPA pilot program, the first of its kind, will give firm employees who have already completed 120 hours of undergraduate education the opportunity to fulfill their remaining 30 credit hours – necessary for licensure as a CPA – through online classes with NSU’s H. Wayne Huizenga College of Business and Entrepreneurship, an institution accredited by the Association to Advance Collegiate Schools of Business. “Through Bridge to CPA, candidates can obtain their fifth year of education and take career-relevant courses, approved for licensure in Florida, without having to worry about tuition costs. These actively employed young professionals will have the opportunity to earn a salary and complete the educational requirements necessary for licensure – all at once,” said FICPA President & CEO Shelly Weir who is also an active member of the American Institute of Certified Public Accountants’ National Pipeline Advisory Group and its Experience, Learn and Earn task force.

NU accounting students participate in CPA case competition [Lockport Union-Sun & Journal]
Accounting students in Niagara University’s Holzschuh College of Business Administration’s cost management systems course presented their case analyses to a panel of academic and seasoned business professionals during a case competition on April 23. The competition, which was sponsored by Lumsden McCormick CPA.

Oxford resident awarded scholarship from the Massachusetts Society of CPAs [Oxford Eagle]
The Massachusetts Society of Certified Public Accountants announced recently that Joseph Szela of Oxford was awarded the MassCPAs Alliance – Silver Scholarship by the MassCPAs Educational Foundation’s 2024 Scholarship Program. Szela, a student at Bentley University, was one of 51 students selected to receive a scholarship. The students were honored for their awards at MassCPAs’ annual, member-wide networking event, Connect 2024, on May 8.

Londonderry’s Minton Recieves CPA Educational Foundation Scholarship [Patch]
The Massachusetts Society of Certified Public Accountants (MassCPAs) Tuesday announced that Samantha Minton of Londonderry, was awarded the Baker Newman Noyes Firm Named Scholarship by the MassCPAs Educational Foundation’s 2024 Scholarship Program. Minton, a student at Bentley University, was one of 51 students selected to receive a scholarship.

News

Solar storms could disrupt communications, make northern lights visible in US this weekend [New York Post]
Citizens of the internet should be aware it could be a buffery weekend.
NOAA has upgraded a geomagnetic solar storm watch from a Level 3 (“moderate”) to a Level 4 (“severe”) as several solar flares have combined. That could grace the northern tier skies with brilliant auroras but also trigger GPS problems, hamper satellite communication, and cause high-frequency radio blackouts. “Watches at this level are very rare,” NOAA stated in the watch. “This is an unusual event.” This is the first “severe” Geomagnetic Storm Watch issued since January 2005.

Deloitte Aids World Economic Forum on Quantum: Q&A [IOT World Today]
The World Economic Forum (WEF) published its Quantum Economy Blueprint earlier this year in collaboration with IBM and SandboxAQ. It aimed to advise organizations and governments on how they can prepare a sound quantum strategy as wider adoption gets closer. A Deloitte team, including global quantum computing lead Scott Buchholz, advised on the report, sharing insights from the company’s experience of working with clients on quantum projects in the field.

‘Big four’ accountancy firms PwC and EY fined over LC&F audit failures [The Guardian] “Big four” accountancy firms PricewaterhouseCoopers and EY have been fined a combined £9.3m for a series of failures in auditing the accounts of London Capital & Finance, the collapsed mini-bond firm that wiped out the investments of thousands of savers. It concludes a near four-year investigation by the Financial Reporting Council (FRC) into how auditors breached their duties while reviewing the firm’s finances in the years leading up to its demise in 2019. Jamie Symington, the regulator’s deputy executive counsel, said the auditors failed to understand the business and raised the possibility that there could be “material misstatements” in the company’s accounts. “These breaches are made considerably more serious by the fact that all of the auditors knew they were auditing an expanding business which was engaged in selling unregulated financial products to retail investors, and that potential investors might place reliance on the clean audit opinions,” Symington said.

Trump Media hires Phoenix accounting firm in wake of SEC charges [Phoenix Business Journal]
On Monday, Trump Media (Nasdaq: DJT) said in a regulatory filing that it had hired Phoenix-based firm Semple, Marchal & Cooper LLP, effective May 4, to replace Colorado-based BF Borgers CPA PC as its independent registered public accounting firm. The move was approved by Trump Media’s audit committee.

China releases interim measures for data security management by accounting firms [Global Times]
China’s Ministry of Finance and the Cyberspace Administration of China have released a series of interim measures for data security management by accounting firms, effective from October 1, 2024, with the aim of standardizing data processing activities, according to an announcement by the finance ministry on Friday. According the announcement, the interim measures are a refinement of the relevant provisions for the national network and data security management in the certified public accountant (CPA) profession, providing a basis for CPA firms to carry out data security management activities.

Talent

If you’re in the market for fresh talent, Accountingfly’s got you. Check out this week’s top remote accounting candidates and sign up for Always-On Recruiting to get a regular batch of candidates like these in your inbox every week.